robynjh,
The example that you gave that "doesn't work" and the one that does are both using the Mouse Over/Focus color. The difference is that in the first example, the Mouse over/Focus color is an exact match for the main background color of the More Programs panel and has the left content margin set so that the Mouse over/focus color doesn't cover the left border of the More programs panel where the colors change. In the second example, the artist elected to use a different color to emphasize the Mouse over state, and left the content margins at the default settings.
This is an artistic choice by the artist in many cases, but sometimes it may also be the result of an oversight or lack of knowledge about the possibilities in skinning. In either case, it's not considered very polite to just state categorically that something "looks terrible." It's all in the eye of the beholder after all.
At any rate, the second example could quite easily be modified to make the Mouse over color appear to disappear, so to speak by changing the RGB settings and adjusting the content margins, particularly the left margin. The color of the arrows, by the way, has absolutely nothing to do with the Mouse over color as they are drawn on top of the Mouse over color.
As has been suggested previously, it would also be possible to do this with an oversized More Programs Arrow graphic. If you are really interested in that method, there is a fairly good discussion of it in this thread: https://www.wincustomize.com/msgboard.asp?id=262666&BID=WCH&page=1#266760
I hope this clarifies some things for you. If not, just come on back and we'll keep trying til we get it right.