Looking at your html code, it looks like you have the image of the dog contained in a <p> tag. The first code within this <p> tag is a <br />. Try removing that <br /> tag since that is my guess of why there is extra space above the dog image in IE. In general, I would recommend using CSS to position the <p> tag if you need to (margin-top or padding-top). Also keep in mind that #topNavigation has an explicit height, so if the content inside it exceeds that height, it could cause an overlap like you are seeing.
