Thanks for a great and easy to understand mini-tutorial!
I have a question though. I've tried to hand-paint such a height map as in your first example (the wall) and generating a normal map with the Nvidia's plugin in Photoshop. Following your example with the thingy that sticks out in the middle bottom of the wall, I've filled a solid circle with white on a mid-grey background. But the normal map always result in a
framed effect rather than something beveling out completely. It becomes a sharp framing circle effect rather than a solid form that bevels out. Is this dependent on the gradient perhaps? I've tried to create a feathered circle (with a gradient) which gets me closer, but it gets too weak to properly see. Increasing the scale in the plugin causes an ugly scratchy look and setting the bump map amount in 3ds max it still gets too weak.
Any idea what I'm doing wrong?
On the other hand, I see that you use sharp lines which results in nice bevels - but when I do it (using pencil tool or marquee tool without feathering or antialiasing) I get an extra bevel! This "render" could help explain it:

This normal map is generated from a white square on a mid-grey background, but the image displays two edges. By the way, this image also illustrates my previous question, the framing effect. My guess is a resolution issue, but I use resolution sizes at 1024x1024 and up, just as in the speed texturing challenges here at this forum. Any ideas what is causing this?
So since all my normal maps results in very messy bevels I've actually come close to quit using them at all. Or maybe learn the method of modeling high poly and bake a normal map to apply on a low poly model (I'm fairly new to 3D). Still, it would be nice to paint normal maps in Photoshop like you did to make the models more detailed. I'm also following the speed texturing challenges here with great interest, and am impressed how people can create depth on a simple plane with a normal map. Any help is greatly appreciated!