Next, you'll need some type. I used a font called ITC Souvenir, 175 points, Demi (Bold), color black, Faux Bold selected (to make it as bold as possible) with crisp anti-aliasing. I set tracking to -50 so that the blood letters will run together a bit. Call me sick, but I like that.
You may not have all of these settings in your Type Tool dialog box, depending on what version of PhotoShop you are using. I created this tutorial using version 5.5. Try to use a heavy type face. Make sure your type is large enough so that it doesn't get lost in the 'ooze' and become illegible. Also, make sure to leave a good inch or so on each side of the letters as this effect will splatter a bit!