OK, this is not so bad. You're 90% there. You just have to get a better handle on how flowed content layout works. It's a concept that most people have trouble understanding when they first start working with forms. Once you get used to it and you are making a lot of dynamic forms, you'll always just lay them out with flowed content. I rarely use positioned content.
Flowed content is very simple, and if you've ever done any web page work the concept is pretty much the same as the way HTML pages are layed out. The first object in the hierarchy is placed at the top left corner of the subform's content area. Then, the next object is placed immediately after the first, then then next one after that, etc. There is no spacing between objects; the next one is placed abutting the boundaries of the previous one.
There is another setting that controls the layout; it's called Flow Direction and it's underneath the Content box on the Subform tab. There are two settings: "Top to Bottom", which means that each object is placed "underneath" the previous object, not next to it on a line. This means that objects are always stacked vertically down the page. The other, "Western Text" means that the rendering engine will try to place the next object "next" to the preceding one; i.e. across the page horizontally. If the width of the new object is small enough that it will fit within the horizontal margins of the content area, it will be placed next to the previous one. If it's too wide, it will be place on the next line, below the previous object and against the left margin. Please note that I use the word "line" a little loosely, it's not a line of text per se but you get the idea.
The big issue with flowed layout is that there's no "spacing" between objects, since everything is placed immediately against the boundaries of the previous object. So, you have to include spacing in your objects to separate them. This is usually done by using the margin settings on the object's Layout tab. It sets the amount of extra space on each of the sides that is added when the object is layed out.
You can see how flowed layout makes dynamic forms work; if you type into a text box and it expands downward, the rendering engine will re-layout the page and draw the expanded box, then draw the next object below it. No overlap.
So, in your case here's what you need to do, based on your sample form:
1. Set the Flow Direction of the subform that holds the expandable fields to "Western Text". You'll see that the Type/Date/Level objects will now flow next to each other since they all fit on one line. If you have anything that is now sitting next to a previous object but shouldn't, make the width of the previous object wider so that the next one won't fit on the same line, and it will be pushed down below.
2. Add spacing between objects. For example, select the "Details of Incident" text field and set the Bottom margin on the Layout tab to ".2". You'll see that no matter what you type in there, the layout engine will always add .2 inches of space below the text field, which will separate it from the text box below. You can use the left/right margins to separate things that flow horizontally on the same line without making the actual data entry area larger by widening the entire object.
Something else that will make your life easier is to break up your document into logical sections using subforms, and getting the layout inside each one correct. In fact things like the Type/Date/Level line can be made into a subform containing one set, and the subform repeated 3 times. The same spacing idea works between subforms; set the margins on the subform's layout tab to separate it from the next one.
Hope the above is helpful. See how close you can get to the original form, and let me know if you need additional help.
I have attached my simple form for you to look at and let me know what I am doing wrong. Also if I have already started a form can I change the fields to have the text boxes expand or do I have to start all over. Any help would be greatly appreciated.