If the last cell is a blank cell (look in the Preview window), delete it. This will eliminate the small gap. If you see the Titles pane light up in red, go to it and delete the red item (should be the unreferenced Chapter number).

For seamless, if you see the last cell of disc 1 and/or the first cell of disc 2 has the Seamless column labeling "no", double-click on the cell, a PGC Block Attributes dialog brings up, put a check mark next to 'Seamless playback' and this will change to "yes" in Seamless column.

To create chapters, in the Titles pane, right-click on any Chapter # and select "Add chapter". A "Select Program" dialog brings up. Multi-select (use Shift) from the selected program to the last program, and click OK.