I think because in that tutorial, his not actually using a layer, is a background is doing it on.
Correct...
I have tried going it as a layer but when you get to the part about changing the Hue/saturation (Ctrl U), the actual colour doesnt change, im guess this is because its a layer? Any ideas, sorry im a N00b when it comes to PS 
Now I'm lost here from what you are saying...I guess you are talking about the video ( i cant see it where I am at here at work)
Look at the blend mode when you bring up outer glow...and change it from Screen to Normal...and then expand or contract the glow using the Spread/Size levels...see if that is what you need...
After posting, I did a simple search of "make lightning in PS" and there are SO many different techniques to doing it...
I made a photo for my Star Wars buddies with them all using lightsabers (which is somewhat simular to making lightning)...I used blur, outer and inner glow...
Some people like to go around their leg to reach their elbow...while some people just raise thier arm and simply touch elbow
Just do some searching, you'll find different ways, & experiment ....and also by doing that, you will find out ways that are better for you...
Sorry if I am confusing ya..I'm better at face to face conversations and working beside you to show you what you need.
( Like --BINGO! Either that, or I was attempting to say "before" but it was too many letters to type--, I dont use difference clouds...unless i'm making backgrounds)
As for the lightsaber...its basicly lightning in a straight line (as per say) try this link and like said before...play around with it...
http://www.bluesfear.com/tutorials/Lightsaber.phpDont worry bout being a Noob...PS is very complex when it comes to a newbie...When I was in the miltary (photographer) PS was just coming out...We had the program in my shop and with me being the new kid (fresh out of Boot Camp, no money, no car) I would sit and play and understand Photoshop & Illustrator...Took me roughly a year to know it front and back... After that first year, i was making crazy graphics and BAM i became digital guru for the shop. They begged me to stay in when my time came up. It takes time...

Show Nuff!