Create polygon buffer from line?

You have to create a polygon feature class and add it to the map. Start Editing and set the polygon layer as the target layer (9.3) (or select it the polygon feature template in version 10). Select the line you wish to create the buffer from and run the buffer tool. You can then cut the polygon with the Editor tools. Is this what you are trying to do?

Using Buffer_analysis in ArcGIS 10, allows you to define the output featureclass of the buffer objects, so in the Python window, simply use code like this:

arcpy.Buffer_analysis("LineFtrs", "buffer_output", "5 meters", "FULL", "ROUND")

Where LineFtrs is the obj to buffer.

This can also be done to a selection.