Ok,
So I've deleted the plain skin folder and redownloaded the one from the skins repository.
Still mangled.

I deleted my whole blog dir and installed v1.6 again choosing to upgrade from the previous database install.
Uploaded the plain skin again and set all blogs to use it.
Still mangled even after a fresh install of both b2e and plain.

Now I'm really confused as it look fine on the repository?!?!

Updated IE to v7 beta 2 (which is suprisingly good) but still no luck.

I've changed back to the custom skin for now but the bug can still be seen here:

http://www.bioticaudio.com/blog/index.php/news?skin=plain

Yup, that's the same problem I had with IE when I tried to use James Foster's skin on my site. Loved in in FF and hated it in IE. Of course IE is poor in css standards compliancy. I never did have the patience to figure out all of the hacks to get around it not displaying correctly in IE so it was back to the drawing board! :roll: