[Nicholas Pollicino] "I too am having the same problem with Encore CS3. I am using OSX 10.6.2 snow leopard."
CS3 was never tested on Leopard, let alone Snow Leopard. The issue does not exist with Tiger. The solution is to downgrade to Tiger, or upgrade to CS4.
There have been reports of success (but also of failure) by changing the subpicture highlight layer name prefixes from (=1) to (=2) or (=3). You should try both. If it doesn't work, and you have Photoshop, try saving the current menu (that doesn't work) as PSD file with a different name. Then delete the current menu(s) that don't work from your project and clean the media cache database from Edit | Preferences. In Photoshop, rename the layers with the new prefix and save the menu. Import the saved PSD file as a menu and try again.
As always, use an RW disc for test burns, to prevent making coasters.
-Jeff
The Focal Easy Guide to Adobe Encore DVD 2.0 
