Not sure if it's in PS5 or not, but in PS7, make the red circle, then re-select the circle, go to select>modify>contract enter the pixel width...the selection marquee now contracts that many pixels, then hit cntrl-x to cut the center out.
For the text, depending what you use PS or PSP, either create the text, then click the curve text button (in PS) or, in PSP, create a vector layer, then open the shapes box, select ellipse, draw a circle....then click the text button, position cursor over the circle you made, the cursor should change..click...the text dialogue box opens...select font and size, write your text (it should appear on the outside of circle)...can't remember how to get on the inside anymore. I did have a tutorial Pataflafla made on this subject...let me see if I still have it and I'll send it to ya. It's for PSP by the way.
Hope this helps someone.