personally I would use 2 arrows (1 up and 1 down)this will make navigation easier for the viewer, and I would just reverse the process that you used for the orginal down arrow scroll..
The Encore preview is not what I would call the best.. best advice i can give you is to use a DVD RW disc and then test play that on a set top DVD player as the little niggles with the preview are not always apparent on the completed DVD.
you are not doing anything wrong, if you add text or buttons to a motion menu then you need to render it, go to FILE>RENDER MOTION MENUS, once you have rendered it then all will play fine.
if you go here https://www.doogs-tutorials.com/encore%201.5%20.html and look to tuts #09 and #10 in the advanced section (red section), the tuts will give you a rough idea as to how to go about it.. (you may have to copy and paste the above link into your browser..
The DVD spec only allows the use of 1 solid colour for a highlight, or a combination of 3 seperate different solid colours..
You have to cheat to get the efect you want, in other words you need multiple menus along with the auto activate feature of Encore…
as Jeff has just posted, DVDLab Pro, it does need a seperate MPEG encoder though, as it don’t work with .AVI files., or Sony DVD Architect is another one but accepts .avi, both have a steepish learning curve
https://www.videogears.com/ as these are .PSD files they will open up in Encore CS3, and if you have Photoshop then you could always make your own custom menus… hope this helps