This is an definition list and this line is incorrectly placed. Lists can help make a page read and look better. But it will look different on different browsers or even on different hardware with the same browser. Long entries will wraparound just like you would expect them to so that they look like a related line of text. This allows a glossary or other structured text presentation to be made on the page.
Small graphics are best.
Transparent are better. There are tons of GIFs running around on free pages and sample CDs. Sometimes you can download a button from a software site only if you register that you are doing so and use it according to the owner's rules. Netscape does this. So does Submit-It.