I built an animated DVD menu in After Effects, rendered it out of AE as an MPEG2-DVD file and brought it into Encore. I then built the buttons using the "edit menu in photoshop" feature.
The buttons consist of a layer of white text with the eye off using "(=1)" as the name so it only shows up when it's selected, under that is a layer of gray text with the eye on to act as the "inert" button state, all inside of a folder that uses the "(+)" to denote that it's a button group.
When I save and go back to Encore, the button group functions but instead of having an animated menu, Encore is only using a still frame of my menu. When I turn the eye off on the gray text layers, the animation works, but I'm left without any sort of inert state for the buttons.
Can you have inert button states and animated menus in Encore?