Ok, I got some help from a dev and you can in fact do this without using tile layout boxes. Look below. All the items in bold italic were changes, that you HAVE to make for it to work right.
Code:
<HotButton item="HB_Button1">
<EQType>hotbutton/Bar 0/0</EQType>
<Font>1</Font>
<RelativePosition>true</RelativePosition>
<Location>
<X>2</X>
<Y>20</Y>
</Location>
<Size>
<CX>37</CX>
<CY>34</CY>
</Size>
<Text>1</Text>
<TextColor>
<R>255</R>
<G>255</G>
<B>255</B>
</TextColor>
<DecalSize>
<CX>40</CX>
<CY>40</CY>
</DecalSize>
<SpellGem>HB_SpellGem</SpellGem>
<InvSlot>HB_InvSlot</InvSlot>
<ButtonDrawTemplate>
<Normal>A_HotButton1Normal</Normal>
<Pressed>A_HotButton1Pressed</Pressed>
<Flyby>A_HotButton1Flyby</Flyby>
<Disabled>A_HotButton1Disabled</Disabled>
<PressedFlyby>A_HotButton1PressedFlyby</PressedFlyby>
</ButtonDrawTemplate>
</HotButton>
<Screen item="HotButtonWnd">
<Pieces>HotButton:HB_Button1</Pieces>