For creating site in sharepoint follow, following steps.

Step 1: Open main page of office sharepoint server 2007

Step 2: Go to Site Actions menu on right of main page and select the menu option Create Site

Note: As we are creating site under home site, it will create new sharepoint site under home site.

Step 3: Enter New Sharepoint Site details, in order to create new sharepoint site.

Enter Title for site.  Example: My New Site

Enter Description for site. Example: Welcome to my new sharepoint site

Enter web site address.  i.e.  Url which would be used in order to browse this site.  Example: MyNewSite

Step 4: Select Template for New Sharepoint Site

There are wide range of template available, you can find more details about each of template by simply selecting them.  This step is important in sharepoint site creation as different sharepoint site template supports different feature.  For this demo we will select Team Site  Template from collaboration tab.

Step 5: Defining User Permissions.  

You can give permission to access your new site by default site use same permission as parent site, ie. users who have access to parent site will also have access to newly created site.  Lets choose default option.

Step 6: Select Navigation Inheritance

By default it will appear in top link bar of the parent site.  Lets use default option.

Step 7: Site Categories

You can check desired categories in which you want your newly created sharepoint site to be listed.

Step 8: Press Create button in order to create sharepoint site.

Your New Sharepoint Site is ready and its link is displayed in top link bar.