I am making a dvd menu with an active area and an image to be displayed when the button is highlighted. Encore sees this highlighted image as a button, therefore it interferes with the other buttons on the menu. Is there a way of specifying the hit state for a button so it doesn't include this highlighted image?
The short answer is no. Any part of a button will be included in it's selectable area. That's not a limitation of encore, but of the dvd specification. You can however create a workaround, by creating separate menus for each button, so when you press the down arrow, it auto-activates the next menu, which shows your picture while the next button is highlighted. This has limitations, like not auto-activating when viewed on a software dvd player (computer), and the audio starting over when the menu changes.