OK, this is understandable...
in the featured.tpl, do you see the code lines:
	Code:
	 {if $f_products ne ""}
{if $total_pages gt 2}
<br />
{ include file="customer/main/navigation.tpl" }
{/if}
{include file="customer/main/products.tpl" products=$f_products featured="Y"}
{if $total_pages gt 2}
<br />
{ include file="customer/main/navigation.tpl" }
{/if}
{else}
 {$lng.txt_no_featured}
 
IF featured products are empty, then it will display the language var, 
$lng.txt_no_featured -- and wrap it in a dialog... 
You could (as i have) simply comment out the include call to featured.tpl in welcome.tpl, as well as wherever else it is called...
	Code:
	{* {include file="customer/main/featured.tpl" f_products=$f_products} *}
 
There is more than one way to accomplish this.
Webmaster mode will help you... look for any calls to customer/main/featured.tpl and comment them out.
BUT -- I think if you lose it from welcome.tpl, the if/elses should solve the rest.