Encore CS3 - Making a scene select with images
 

Is there a way to make the program use the frame from the chapter point on the timeline to display next to a scene/chapter selection button on a menu?

It is call poster frame. You can scrub timeline in Encore to locate the frame, then right click on the chaper mark and select Poster Frame.

If you want to know how to create the box where the poster frame will go, open the menu in Photoshop, then create a new layer and place it in the Layer Group of the button you are adding it to. Then change the Layer name to this:

(%) Drop Zone

Now create a box using the selection tool (with the same aspect ratio as your video), and fill it with any color, gray is standard.

The box becomes part of the selectable area for that button, so make sure it doesn't overlap with any other buttons.

If you want the box to have an odd shape, you can create one with the shape tool, then drag the vector mask of the shape layer to that of the drop zone layer, then you can delete the shape layer.

Save the menu, then go back into Encore.

Now you can open the timeline for your video and drag the chapter marker into the gray box you created, and it will replace the gray with that of the poster frame for that chapter. The poster frame can be changed to any spot in the video. If you want the frame to play the video instead of being a still image, you must enable "Animate Buttons" in the motion tab of the menu.