You may want to try flattening the image and save a copy into a Tiff and bring it in to DVD SP that way.
When you add buttons, are you just using the rectangle tool then using a layer as an overlay or doing something else? Which part is causing issues? Often fonts can be a bear, but it sounds like you are not running into that problem....
As an aside, some of the information about menus
About Menu Rendering
Depending on how you create your standard menus, they may have to be rendered
into an MPEG-2 video asset when you build your project. The menu must be
rendered if it uses any of the following:
• Assets assigned to a button
• Shapes
• Drop zones
• Text objects
• SIF (MPEG-1 or MPEG-2), 1/2 D1, or cropped D1 video
Standard menus that only use a background (whether still or video), an overlay, and
one or more audio files do not get rendered.
Whether the menu gets rendered or not can be important for a couple of reasons:
• The time it takes. Rendering menus is a process that composites all of the menu
elements, one frame at a time, and creates an MPEG-2 file out of these composited
frames. Depending on your system and the length of your menus, this can take a
significant amount of time to process. See “Menu Preferences” on page 115 for more
information.
• Extra processing can affect video. If your menu background video must be rendered,
the extra processing has the potential to change the video a small amount.
Anytime you decode compressed video, process it (such as by compositing shapes
or text over it), then recompress it, you can expect some subtle changes to the
background video. In those cases where you have meticulously encoded your
background video before assigning it to a menu, this extra processing could
noticeably change the video.
When SD menus are rendered, they are encoded at 7 Mbps using the one-pass VBR
method. HD menus are rendered at 21 Mbps using the one-pass VBR method.
