Ok, after some pondering and tinkering, I am very close to what I want, thanks to your code and rethinking about using TabView.

Clear[tabvw1, pne, pnes]; tabvw1 =   (pne[dta_] := 
     Pane[Grid@Partition[dta, UpTo[5]], {200, 100}, Scrollbars -> True];    pnes = {pne[Range[10]], pne[Range[100]], 
      pne[Characters["Hello there, dance with me."]]};    Grid[{{SetterBar[
        Dynamic[x], {pnes[[1]] -> " Set 1 ", pnes[[2]] -> " Set 2 ", 
         pnes[[3]] -> " Set 3 "}],
       ActionMenu[
        "Actions", {"Beep" :> Beep[], "switch" :> (x = 2)}]}, {Dynamic[
        x]}}, Spacings -> 0]); tabvw1

So, independent of styling, I think this is close to what you're asking for:

Grid[
 {{SetterBar[Dynamic[x], {1, 2}], 
   ActionMenu[
    "Actions", {"Beep" :> Beep[], "switch" :> (x = 2)}]}, {Dynamic[
    x]}},
 Spacings -> 0]

As for difficulty of designing UI widgets with Mathematica, I'm not sure what your end goal and vision are. I recommend you defer wrangling with style and layout until after you've got functionality working. I recommend you use the "built in" tools (particularly Manipulate) and avoid directly accessing low level controls unless absolutely necessary. As for layout, I'd avoid using Overlay for your core UI. Grid is a very versatile and feature-rich function, so try it first.