Hey Adam,
I was able to create an isolated version of my code that shows the IE effect I was talking about. Included in this archive are the original simple.asp modified only to use my toolbar and other configurations. After that simple1.asp has my content but your stylesheet and renders the toolbars as far as I can tell the same. The third version, simple2.asp, replaces your linked stylesheet with my inline styles. Please don't laugh, they go back to 2001 and are being revised! With this page you'll get exactly the same results as the sample image. Obviously something related to tables in my stylesheet corrupts CuteEditor. Why in tables? Because if I include my stylesheet but don't wrap the control in my sample table display the corruption doesn't happen.
If there's too much to deal with here I'd be happy to open a support ticket...
Thanks again!
Chris Rowley