Storm, I wanted to make one more comment. In addition to Suzi's notes:
"In the Location section, make the desired selection
Inside: the border appears inside of the dashed-selection line
Center: the border appears centered over the dashed-selection line
Outside: the border appears outside of the dashed-selection line"
I will add that if you want a larger stroke on the outside, it is better to do an inside stroke on a new layer and then transform (CTRL+T) and enlarge the stroke while pressing ALT (enlarges equally from the center out on all sides) since an outside or center stroke makes for beveled off corners like this which can be seen better the wider the stroke is.
"In the Location section, make the desired selection
Inside: the border appears inside of the dashed-selection line
Center: the border appears centered over the dashed-selection line
Outside: the border appears outside of the dashed-selection line"
I will add that if you want a larger stroke on the outside, it is better to do an inside stroke on a new layer and then transform (CTRL+T) and enlarge the stroke while pressing ALT (enlarges equally from the center out on all sides) since an outside or center stroke makes for beveled off corners like this which can be seen better the wider the stroke is.