Any help would be appreciated.
The hashed box is what the DRC uses to indicate the region in which an error is occurring. Once there is no longer an error, the box will vanish.
In your case the error is due to a clearance violation in the distance between two pads of two different signals. Eagle allows you to set what clearance you require between different objects on the clearance tab of the DRC window. You should see something like this:
When you click in the different boxes, the image on the left changes to indicate what the type of clearance the box controls. In your case it is pad to pad clearance (highlighted). You need to ensure the distance between the edges of the capacitor pads is greater or equal to the clearance setting of the DRC.