Smooth Content Box

1. Begin with a new file, 500x500, with #999999 as your background color. Then create a new layer in the layers palette.

2. Now take the Rounded Rectangle Tool and create a shape similar to the image below.

3. Then go to the layers palette and right click on layer 1 and choose Blending Options, then apply this settings.

Now should it look something like this.

4. Create a new layer, then set your foreground color to black and then once again take the Rounded Rectangle Tool and draw out a shape, try to do something like the image below.

5. Now right click on layer 2 and choose Blending Options and then apply this settings.

And that's it you are done! This is what I came up with.