The following article contains step by step instruction on how to create an "Issue Tracking List" and a "Custom List" to work with a Three-State Workflow.
How to create an issue-tracking list:
(Note: A Three-State workflow can be used with any standard or default issue tracking list. )
1. In the upper right hand corner, Select the Settings button and scroll down to Site Settings.
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2. Within the Site Settings page and under Web Designers Galleries click Site Content types.
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3. Under the Site Content Types, change the Show Groups drop-down arrow to List Content Types.
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4. Under the List Content Types presets, select Issue.
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5. From here you can alter the preset Issue List Name, Description, and Group as well as set and edit the visible columns and Workflows that will be used with this alert.
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(Note: The chosen list name will appear at the top of the list page you create. The name will become part of the Web address for the list page, and will appear in the navigational element that will help users find and open the list.)