Hi Rebecca,
You're on the right track with photoshop and slicing. However, I've tried creating skins in Dreamweaver only to have to totally redo them to get them to work in DotNetNuke aftwards. If you are determined to learn to skin, be advised that you've taken on a far from simple and often frustrating endeavor. Still, if you are determined you can learn to skin. It helps if you already have a good background with CSS and HTML.
I have found the best way to skin is using Microsoft Visual Web Developer 2008 Express Edition (download from Microsoft) along with the DotNetNuke Starter Kit (found on this site). Some nice person on this board pointed me to those after I'd already spent a year doing it the harder way. Those software are free and hopefully not too difficult to install. Using this software you can see what your new skin will actually look like in DNN (mostly...there are always unexpected quirks to frustrate the most determined skinner!)
The skinning document that is available tells you how to create a skin using an html file to start. It is much harder to skin using starting with HTML because you have to learn how to modify the XML file, which is just adding more problems. It is much easier to skin using the .ASPX. I know everyone says to use the skinning document, but for me it just made it more confusing.
My advice is find a free .ASPX skin to download and then explore it in MSVWD. To upload a new skin using .ASPX, you need only 2 files: skin.aspx and skin.css (and of course also your image files). It is possible to add other files like a container or an admin skin, but those are the only two you MUST have. You should read the documentation found on this site about how to upload and install new skins.
Good luck!
~Bee