Have you seen this tutorial:
How
to style and skin the search box in DotNetNukeYou can get rid of the site search radio button by setting showsite="false".
You can put the search image inside of the box using a javascript or jQuery "watermark." If you Google that term you will find some examples.
As for the CSS, you'll need to use techniques similar to those described here:
Troubleshooting
DotNetNuke Skins.
The search implemented at
http://brownadvisory.com/ is similar to what you want. It's not the DotNetNuke skin object, but is very similar to it.