You must change the padding by editing the skin to change the menu lines height.
1. Download and install the freeware, Resource Hacker from this site:
http://www.angusj.com/resourcehacker/ 2. Copy the skin which you are using from C:\Program Files\Classic Shell\Skins to some other location such as Desktop and rename it. Renaming it is important so it doesn't get overwritten when a Classic Shell update is installed. Note that for Windows 7 style, the skin extension is .skin7 and for Classic style, the extension is .skin.
3. In Resource Hacker, open this skin. You might need to edit the values of:
Main_padding
Main2_padding
Main_text_padding
Main2_text_padding
2 suffix means second column values.
The four numbers for each setting are the padding added to the left, top, right and bottom.
4. Click Compile Script and save the skin and copy it back to C:\Program Files\Classic Shell\Skins. Switch to the newly edited skin from the "Skins" tab in Start Menu Settings.