Hello Adobe Users

I am curious-
What is it that determines the size of the overlap area when creating custom DVD menu buttons?

I was assuming the overlap area is actually specified by the canvas size of a .psd but after experimenting I find that reducing the canvas size does NOT reduce the button overlap safe zone.

Here is my situation. I have created a new thin button. I plan to use this button on my sub menu, but the positioning the buttons the "red-frame" overlap area is much taller than the button itself. This is a problem because I need the spacing around these buttons very narrow.

How can I reduce the size my buttons overlap area?
Re-creating this button will be pretty easy, right now that most important factor is that my overlap area is the same size as my actual button

The "hit area" occupied by a button is a rectangle enclosing the button's graphic, including the layer containing the highlight. If this rectangle appears to be larger than you expect it should be: Are there any stray pixels? A glow or shadow perhaps?

Turned out to be a shadow that had been rasterized when layers were merged on my .psd

I've got it working perfectly now, thank you for helping me find the problem.