I have 2 layers, a text layer on top, and a shape behind it. When I add a drop shadow to the text, the shadow shows up BEHIND the shape, instead of on it. If I choose mode "Multiply," then it shows up in front but is way too big. Can someone explain why this would be?
Sounds like you added the effect to the layer and the Multiply to the shape. In the Layer's panel expand the layer to see the items in it, click on the shaded circle at the right of the Layer's name and drag to to the circle of the text object. Before applying an effect make sure this circle is displayed as a double circle next to the item you want to apply the effect to.