Can You Turn on anti alias I could'nt activate it in Photoshop 7 (But then I normally
Use Paint Shop Pro 7 & 8)

To make smoothe round corner rectangles in Photoshop: Make a rectangle selection, then go to your channels (Window menu / channels) and click on the "save selection as channel" button (white circle icon). Now click on the new channel layer this just created and deselect (control D). Next go to your filters menu and choose Gaussian Blur. Choose a high radius, like 15 or so and click OK. Now bring your Levels dialog (Control L) and modify the Input Levels to something around 125,0,135. You can play with these values a bit until the edges have the smoothness you like. Select your shape by Control-clicking on the alpha level, then switch back to your normal layers tab. Create a new layer if desired and fill your selection. Voila, you have your smooth round cornered rectangle. You can do this for any size rectangle, except that you'll have to adjust the radius value of the Gaussian Blur accordingly (the bigger the rectangular selection, the bigger the blue you'll need). Have fun. This seems long and complicated, but once you get used to doing it all the time, it's really quick and always delivers great results.

Well I Learned Something Cool Today (About Photoshop)
Thanks Wizop paxx

Thanks also.