I guess you're using the default menu. This will add a menu item for every page you create and list them in alphabetical order after the home page.
If I'm right, take a look at this article I wrote on my own blog about creating a custom menu.
As for the overlapping problem, it seems to me that you've got to find some way of putting the search box on a different level or in a different location. At present it's the last item on the navigation list and is absolutely positioned at top right. You need to take it out of there and decide where you want it.
You'll only be able to make the tabs narrower by making the labels shorter. The article I link to above describes how to do that. But it may not be enough: particularly if you have more menu items you want on the menu.
Something else you could look at would be to increase the width of the menu and the main content container. This would probably work, preferably in a child theme, at the end of the style sheet:
#navigation, #container {
width: 1000px;
}
It works in Firebug, anyway.
HTH
PAE