Better results for using previously created frame image:
Paste image as a new layer and resize to just cover the original image. Then set bevel/emboss layer style as shown. The picture will look like it is behind a bevel-cut matte board.
The light source should be set to replicate the frame lighting. I neglected to do that in this example.
The best results would obtained by running the frame action on the original image.

forum discussion: http://forums.dpreview.com/forums/read.asp?forum=1006&message=34276583
Inset chair image by Michael: