how do you bake sculpty textures in blender?

I figured out how to build sculpt prims, but I can't find any tutorials or help anywhere that will show me how to bake the textures for a shaded/highlighted effect. I have seen it done in second life so there must be some way to do it. In blender, the sculpty looks glossy and realistically shaded, but in second life, its just a plain white boring sculpty. Is there any way to bake a realistic texture that will fit on the sculpt perfectly, instead of going into photoshop and blindly guessing how to draw a texture for it? also, is there a way to apply a background texture or material to it in blender so that it gets baked in with the rest? and can you change the lighting/glossiness effects on the blender object for when its baked? i know its a lot of questions but any helpful answers i appreciate.

I tried clicking "bake ambient occlusion" and "bake all" it does not work, it leaves me with an ugly black and white texture that looks nothing like the shiny i see in blender. =(

If you know how to produce a working sculpt map, then baking a texture shouldn't be a problem at all. Bake Texture -> Full render should do the trick.

But your problem seems to be that you're not familiar with blender's material and lighting system, I'd suggest getting to know it a bit better. There's tons of tutorials out there.
Ambient occlusion, for instance, is a shading method that basically determines how much light a face receives from the environment, i.e. faces that are partially "blocked" receive less light.
It's very useful for soft shadows and to enhance depth.

However, realize that things in SL will -never- look exactly the same as in blender, especially when things like specular highlights and such come into play which depend on lighting conditions and camera position etc.