1) To clearly lie to, to bullshit.
2) To fuck with, screw with, harass.
3) To suck up to or kiss the ass of in an obvious, belligerent manner.
The origin of the term "buttering of the ass" is not known, but over time has developed three distinct meanings, with decreasing prevalence:
1) excessive kissassery or sucking up, usu. as a way to gain some sort of special favor or attention
2) egregious bullshit and/or obvious lies
3) fucking with or screwing with