I think I found something. in the staticpages functions.inc, it seems like the logic didn't check the showfirstasfeatured setting and therefore didn't see any featured stories. Therefore, it put the staticpage on top.
Dont't know why the staticpage also appeared below the first story, but this seems to work for me.
Basically, I added "&& !($_CONF['showfirstasfeatured'] == 1)" to an if statement
Text Formatted Code
function plugin_centerblock_staticpages (...)
{
[....]
// If there are no featured stories, we won't be called with $where == 2.
// So, if asked to display pages for the top of the page, check if we
// have pages to be displayed after the featured story and if there is
// no features story, display those pages as well.
if ($where == 1) {
// hacked following line to also check for showfirstasfeatured
if ( (DB_count ($_TABLES['stories'], 'featured', 1) == 0) && !($_CONF['showfirstasfeatured'] == 1)) {
[....]