This behavior varies depending on the button you are using. A button like the one you are using has other button layers that appear to constrain the text appearance in Encore. The text is there, by the way; just use edit in Photoshop and you'll see it. But to get what you want, it is not just the text box that must be autosized; it is the other layers (button background; button shape graphics etc).
I never use the drop-and-create-button feature, and always preferred having all the buttons the same size even if the text is a bit different. Add the buttons first etc. using a button style that does not require modification.
Look for example at what you get if you set your default button as Sunset Button - that style is intended (look at the whole Sunset Menu) to run off the right side of the screen. If you type a long button name, it would eventually run into the problem you are seeing, but it would be off screen once you did. You are using a button style that shows its right end, and your text should not go past it.
You could edit the button in photoshop, and make all the layer elements larger, then just apply them to all the layers.