If you make the background of your movieclip the object with the rollover/rollout code, then you can have your buttons sitting a layer above it where they will be fully accessible. You will have to add the rollover/rollout code to the buttons as well because when you rollover them you rollout of the background.
Another way to do this would be to use AS3 where you can do all of your interactive code outside of the movieclip.
thanks Ned. Do you mean adding a new layer in the overlay movie clip or on the main time line above the movie clip?
The problem I faced was the rectangle that tweens upwards on the rollover is part of the overall movie clip and the buttons werent responding to roll overs or on(release) functions
If you didn't follow what I said, I'l try again. As you have already seen, if you assign rollover/out code to the movieclip, you inhibit anything inside the movieclip from being able to interact with the mouse. You need to have all of the objects that interact with the mouse inside the mouseclip. You can create a background inside of the movieclip and use that to trigger whatever expansion takes place. And the expnded background will have to carry the same rollover/out code, as will the button you want to be able to click.
thanks again, have included a button in the mc to trigger the event and it seems to be working better and now just need to figure out the rollout functionality!