I have a template set up. PSD File. I draw a square selection around the part of my main image that I want as the thumbnail and copy. I select the center part of my template and use the 'Paste into' option. Then I use the 'Free Transform' option to size the image. You can use 'scale' as that works. Then as others have suggested I use the 'save for the web' option. This method works with portions of your main image or the whole as seen in this image. Helen

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Senior MarketPlace Tester

If anyone sees a mind wandering aimlessly around..... It is mine.  I want it back.