Editing User Interface and Buttons

You need to change the bounds values, located here in the widget tag:
http://xs218.xs.to/xs218/07344/ijhkjhlkhkljh.gif
Change them to the width and height of one of the buttons in the bitmap
(so to the pixel height and width of your unselected bitmap, for instance)

Actually, those are switched. And this crops the image, it doesn't shrink it.

Ingame:
http://img524.imageshack.us/img524/3108/inagemig9.jpg

Photoshop Version:
http://img519.imageshack.us/img519/212/photfc4.jpg