Well I see what he is saying about the href tag. You have your links set to # and the mouseover attached to them when you should have the mouseover attached to the images.
This:
HTML Code:
<a href="#" onMouseOut="MM_swapImgRestore()" onMouseOver="MM_swapImage('photoshop','','images/butt_01-over.jpg',1)"><img src="images/butt_01.jpg" name="photoshop" width="160" height="25" border="0"></a>
Should be This:
HTML Code:
<a href="/path/to/page.html"><img src="images/butt_01.jpg" name="photoshop" width="160" height="25" border="0" onMouseOut="MM_swapImgRestore()" onMouseOver="MM_swapImage('photoshop','','images/butt_01-over.jpg',1)"></a>
Now granted if you did not want the image to be clickable to take them to the page then you could put # in the href value of the <a> tag but I think you want them to be able to go to the page.
The other issue of pointing to the directories on your computer I think has to do with how you defined the site. Not sure how you got it that way

but I will go and see if I can reproduce the problem on one of my installs. I also need to play with the template function since that is something I never use.