When trying your example on the demo site I do not see your problem, however i see others.
When inserting from the Gallery, the alt element is missing, only the image src is there
When inserting an image thru insert image you supply height, width, alt and border
This does not happen when using the XML Demo, except that the element border does not appear from the gallery insert
The two are not consistant
then without doing anything else, insert from the insert image the create.jpg
select the create image then using the vertical scroll bar on the pane, scroll up
why does the 8 select nodes around the image appear out of frame?
This does this only (so far) in IE, firefox does not do this
You still have the missing space in <br/> but you do put it in <hr />
RC