1) The gap is being caused by the height setting onthe content table:
<table width="776" height="775" border="0" align="center" cellpadding="0" cellspacing="0" id="Table_01">
remove the height attribute and the gap will not show.
you should also remover the php tag after the doctype:
<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"><php>
and the one at the end of the page:
<!-- InstanceEnd --></html></php>
2) The menu css files will be added to the template using file paths if the template is not saved with in a Dreamweaver site . make sure the template is saved to a Dreamweaver site before adding the menu.