Woot! Everything is working! Controls are setup, layouts are great, spent 2 hours last night "testing" games.
My graphics problem was weird. I had to convert all the broken png's to gif to protect the transparency. Then re-convert those gif's back to png's. Then they worked. I don't get it, but at least everything is working now!
I am now setting up the OS for cabinet use. Set a black background. Set the launch bar to auto-hide. Apparently Ubuntu makes it so you can't hide that silly menu bar up top, oh well. I can't figure out how to make AM auto start on boot though. I tried adding it to the "Startup Applications", but that doesn't seem to work. Something is happening, the mouse cursor is gone, but the rest of the desktop is showing. If I hit Esc and arrow up once and enter (the steps to exit AM) then the mouse pointer pops back up and I can use the desktop. I can manually launch AM and it is fine.