Here goes:
1.your first colour, is background – lets say very light blue
2.your second colour (first ‘new fill’ you apply to text) lets say medium blue
3 your inner glow fx should be set to ‘edge’ and your colour should be DARKER then your first fill (medium blue), then based on text size play with the blur. This step creates the depth inside the text area. I kept adding a lighter colour b/c I overlooked the way he explained and glow, made me think lighter for some reason
4. your second new fill (darker blue) and -1px or more transform (the color is actually outside the text, but it helps with the illusion of depth when you only use just a slight negative vertical move
5. your last new fill (white or very light blue – must be lighter than your background) at 1px or more has the same effect as the previous step, but on the other edge of the text. it too is actually outside the original text area, but if subtle enough, it lightens the bottom edge of the text.
Too much transform of the last two fills, makes it look embossed. But the key to this whole comment is the inner glow is darker then the first fill and set to edge. Trust me, you’ll see.

I’m using CS5

Also, the initial inner glow effect only seems to work when I change the color to lighter than the original color – not darker as you suggest.

I’ve tried this in multiple ways and cannot figure out where I’m going wrong. Wanna do this so badly!

<3