Hi Tom,
I have recently been doing battle with Moodle and
IE myself, while my favorite
Firefox browser does exactly what I want.
I suspect your problem also exists in other HTML formats within Moodle. Try to format an HTML Block with a 300px picture and see what happens with IE. So I would slide this off as a Theme Forum question.
However we do have some expert Lesson and Moodler tweakers around this Forum.
For sure, you will have to go behind the interface to get a fix. I had to play with the
CSS files, where I am way over my head. In the /moodle/theme/standard folder there are css files for IE6 and IE7. I bet switching themes in your course will not help much with IE.
Best Chris