Initially, the window is black, and the two dotted rectangles you see represent usable areas on screen. TVs actually don't show you the entire picture, so the area outside of the innermost rectangular area might not be displayed (this is no problem on PCs), so place all important elements in that area.
As you can see, there are various design tools to the right and top of the work area, and below you can switch between your movies and menus. You'll also note a coordinate system relative to your screen area which can help you position elements. As when working with movies, you can use the zoom buttons to enlarge or shrink the menu view. To help you position elements, you can create horizontal and vertical guidelines, that are lines that show up during authoring, but won't be visible in your final project. To create a guideline, just click in the area with the coordinate system, and drag and drop to the menu are. This creates a dotted, yellowish guideline. If you right-click on a ruler, you can configure your existing guidelines and position them pixel-accurate. To delete a guideline, drag and drop it back to the coordinate area.
In the top menubar, you can configure how DVD-lab helps you align menu elements. By default, it aligns to guidelines:

Click the other button shown above, to enable the snap-to-grid mode. DVD-lab will now show an additional grid in the menu area, helping you to align objects.
In order to set up a background, drag and drop one of your image assets, or backgrounds to the menu area. You can also use a frame from one of your video assets: make the video visible in the preview window, go to the appropriate position in the video, then press the Shift key, and while pressing it, drag and drop from the preview area to the menu area. This will set the currently shown video frame as your menu background image.
You have a variety of tools at your disposal to make your menus more interesting as shown on the left. The Aa button allows you to create a text area and write some text on top of the background. This can be used to create simple button links. Then you can create filled rectangles, non-filled rectangles or polygon objects. The next button allows you to group elements together (we'll get back to that). If you have DVD Menu Studio or Real-DRAW Pro (both products from the makers of DVD-lab) installed, you can import vector objects from those tools using the 3rd button from the button.
Finally, the lensflare button allows you to create a lensflare effect:
Unlike other elements, note the LOCKED text in the lensflare area. This means you cannot move the position of this element, or change its size.
The last button allows you to insert a frame from one of your movies. Note that the first two tools are only active if the proper object is selected. The first one allows you to edit a polygon object, the 2nd one allows 3d rotation of any object. Just select an object, then click on that button and you can move the object using your mouse (don't be afraid to try, you'll get the hang of it).

Okay, let's add some text so that we can select one of the two movies. Click on the Aa button, then draw an area on the menu background.
Here you can select a few basic font properties just like you would in a word processing software.
Having written and positioned the text for our selection, let's configure how the selection buttons will act. To do that, we use the Color properties to the right of the menu area:
Fill Color is the color of the element you're adding. To create blue text, just set the fill color to blue, then create a text item.
By default, each item has a shadow. You can change the intensity of the shadow using the Drop Shadow controls, as well as its color. In our example, I've created a red shadow of normal size. The next two sliders are used to control the position of the shadow (distance between the actual text and the shadow) and its intensity. Finally, you can merge text and background using the Transparency options. The slider controls the transparency (left means opaque, the more to the right you move it the more transparent the element becomes) and the selection allows you to control how the transparency effect is applied.
The Map options are also very interesting:
You can have up to three group of colors (so you could create menus having different colors when they're active). If you select antialiased, DVD-lab will use all three groups together and create antialiased (objects having smoother edges) edges.
A button can have 3 states: Normal, Selected and Activated (just like in a webbrowser, normal is a normal hyperlink, selected means you're hovering over the link with your mouse - on this page the color of the link will slightly change - and activated means you've clicked on the link). As buttons use color 3 by default, you should only move the 3rd slider to achieve whatever effect you desire. As you can see, by default, selected buttons are pink.
When working with menu backgrounds it can be quite difficult to select an element. That's where the Layers menu (Lyrs) comes in handy:
All elements on the menu page are shown, and clicking on one will select it in the preview area.
As you can put multiple objects on top of each other, the 4 layer buttons also come in handy. They'll allow you to bring an object to the front, push it back, and bring change its layer:

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