Can't figure out how to set up filters

I have been trying and trying to set up a product filter and just can’t figure it out. I have read through the knowledge base and still can’t figure it out.

What I am trying to do is set up a filter to allow the customer to narrow down the products.

One type of product I sell are aquarium additives. These additives come in either a dry powder or a liquid. What I want to have is when a customer goes to my additive category they can then narrow down the products to either a dry powder or a liquid.

Could someone please give me step by step instructions on how to do this. Once I see how it is done I am sure I can duplicate it for other filters and categories.

Thank you,