Not sure on this one. I have fixed this problem on a few sites just as you did in your xml file. I can't find the spacer.gif anywhere on my site or in any root folder. You may want to try deleting that so it is not overriding your spacer.gif in your images folder. I would also maybe try naming your spacer.gif in your skin package to another name and obviously you are going to probably want to make it transparent so you don't have the white line or even do a width of "0" You if you want to send me your zipped skin package I can try and mess with it and test in on my site and see if it still has the problem.

Dustin
skins@10poundgorilla.com

I found the offending little %$!#.

In my case, it was .MainMenu_RootMenuItem class. Setting the width of that class to 1px solved the problem on all my sites.

Note: Doing this will cause page names with spaces to show on 2 lines in IE. You can fix that by using   (non-breaking space) in the page name rather than a normal space. Small price to pay for sanity.

Hope this helps to keep someone else from pulling out their hair.