To add an option to the lead status drop down, start on the Admin or Administrative tab (I have also seen some companies call this "Settings").

In the "Site Setting" section of the admin tab the first option is "Manage Dropdowns." You'll want to click that.

This page will then give you a list of all the standard drop downs in the InsideSales.com system. Find "Lead Status" (or whatever you have renamed lead status to) and click it.

You will see something that looks like this:

If an option is in the Active section on the left, you will be able to select it from the lead status drop down. If the option is in the Disabled section on the right, you will not be able to select it from the lead status drop down.

You can move an option to the Disabled section by first clicking on the option and then clicking the second button in the middle (it looks like a right pointing arrow). And to enable an option you would first click on the option in the Disabled section, and then click the left pointing arrow.

Click the Plus button (Third Button) in the middle to add a new option to the lead status drop down.

The last button edits an existing option in the active section. Click on the option you wish to edit, then click the button that looks like a pencil.