It sounds as if something in Flare is overiding the text box size.
Have you tried resizing them at some stage or have you changed something in your style sheet? I don't have Flare/ Capture available at the moment so I'm trying to think rather than having the opportunity to play.
From your description it sounds as if there is a generic style being applied. Look for something that starts with a period (.) and includes page break before avoid in its styling.
This, however, is a peer to peer forum and although people from Madcap drop in from time to time, it's not the best place to log bugs or enhancements (although someone in the same position as you might chime in with a work around).
Have you got the latest video drivers?
Are you using a resolution other than recommended?
Have you got the latest version of dotNet?
Are you running enough RAM for video?
By video I am referring to your video/ graphics card, although it might also be on the motherboard.
You could probably get mostly what you want using CSS, but you might have to do it in a text editor. I'm not sure exactly what's available in the Flare editor.
e.g. https://resource-centre.net/css3-tutorials/turning-links-into-buttons/ Neat, although you can get a better effect with the images ...
I'm guessing the site has a mouse over script that changes the button image to create the impression of movement. Used to be a feature in DreamWeaver...
At the bottom of the pane there should be 2 tabs, XML editor and text editor. I'm guessing you are in text editor, which displays content as if you have opened in wordpad or other simple text editor. If you select the XML editor you should see your content with styling elements added.
I'd suggest you take the time and go through the tutorials so you get to try out the fundamentals and then ask questions about the bits you don't understand.
It's also a good idea to look at some of the online tutorials for CSS, HTML and maybe XML/XHTML as they are the ...