alt131 - 3:04 pm on May 4, 2012 (gmt 0)
Hi techwiz, and a very belated welcome to WebmasterWorld. If you are still working on this - and for any other readers, can you clarify whether the "side-bar" is the <li>, the <ul> or the menu container, such as a container div? The reason I ask is that I am womdering if the issue is more complex than the suggestions I've made below.
If the list itself, there are a number of ways to visually "move" the background-image further to the left. The first is to remove the padding (or margin if supporting older versions) from the <ul> to remove the gap between the list marker and the list item that remains even when setting list-style-type:none is set. Another would be to apply a negative margin or position to the <ul> or <li> to forcibly drag it back towards the left. If the aim is to just move the background-image within the <li> then a negative background-position should do it.