When my friend Shirley contacted me to ask how to make keylines with rounded corners, I thought it would make a great tip. Thanks for the request, Shirley!
Begin by opening your project in Photoshop or Elements.
Get the Rounded Rectangle Tool and set your Foreground color to a color that contrasts with your open document. In the Options bar, choose a Radius. The larger the number, the more rounded your corner will be. Click/drag out a rectangle on your page. Holding the Shift key as you click/drag will create a square instead of a rectangle.
Next, select the shape layer in the Layers Panel. Ctrl click (Mac: Cmd click) the thumbnail of the shape to select it. Marching ants will surround your selection.
Tick the Layer Visibility icon which looks like an eyeball on the left side of the shape layer to hide your shape.
Make a new transparent layer by clicking the New Layer icon in the Layers Panel.
Target the new transparent layer and then choose Edit > Stroke to activate the Stroke dialog box.
Select a size and color. Set the Mode to Normal and Opacity to 100%. Uncheck the Preserve Transparency box. Click OK.
Press Ctrl D (Mac: Cmd D) to remove the selection from your keyline.
You can use the Move tool to reposition and resize your box, since the outline is on its own layer.
The hidden shape layer can be deleted by dragging it down into the trash bin once you’re satisfied with your keyline.