First of all, the start button is painted by Windows, and it has a fixed height. So when you enlarge the taskbar, it will always leave an empty space below, this is normal.
Secondly, after you have built your own menu, you'll want to get rid of Windows' own start button. Read the posts of shapeshifter and HorusUK.
Edit: and Yuri (below), sorry I beat you there
Ok, to get the menu like in the screenshot you will have to build it 'from scratch', but it's easy and not much work:
Step 1: Create a regular menu inside your main TrueLaunchBar and give it a nice icon.
Step 2: Add a virtual folder inside that menu (using right-click, New, Menu, 'Create Virtual Folder' ), and point it to "My Computer\Control Panel\Printers and Faxes". Repeat this for every other item you want to appear in the 'start menu', like virtual folder to "Control Panel" itself, and "Network Connections".
Step 3: To get your normal programs inside a menu, create a virtual folder and point it to:
C:\Documents and Settings\
username\Start Menu\Programs\
Unfortunately this will only show programs installed in your account. You might want to replace
username with "All Users" to get programs installed for all users. The normal start menu automagically merges these two folders into one menu...
Step 4: Add your plugins to the menu, like the volume control, and any other you like...
That completes it... [voiceover]Next week in
How to build a start menu we will see the result of Medeiros, same place, same time![/voiceover]