Inexplainable space between lines...

[dstruct2k]

Uhhh... no. A hard return is only read as a <br /> by the worst browsers.

<td bgcolor="{firstaltcolor}" valign="top" $width>
          <img src="{imagesfolder}/$forum[onoff].gif" border="0" alt="" /> 
          <a href="forumdisplay.php?s=$session[sessionhash]&forumid=$forum[forumid]"><normalfont><b>$forum[title]</b></normalfont></a><br>
<a href="showthread.php?s=$session[sessionhash]&goto=lastpost&forumid=$forum[forumid]" title="By: $forum[lastposter]"><smallfont><b>$showlastpostingtitle</b></smallfont></a>
	</td>

After looking closely at your code, I can tell you now it's the IMG. IMG's have a tendancy to do that, especially if they're taller than the text around them. I would suggest this:

<td bgcolor="{firstaltcolor}" valign="middle" $width>
          <img src="{imagesfolder}/$forum[onoff].gif" border="0" alt="" /></td><td bgcolor="{firstaltcolor}" valign="top" $width>
          <a href="forumdisplay.php?s=$session[sessionhash]&forumid=$forum[forumid]"><normalfont><b>$forum[title]</b></normalfont></a><br>
<a href="showthread.php?s=$session[sessionhash]&goto=lastpost&forumid=$forum[forumid]" title="By: $forum[lastposter]"><smallfont><b>$showlastpostingtitle</b></smallfont></a>
	</td>

It should put the image in its own cell just to the left of the text, and remove the 1.5 linespacing-effect.