Thanks. I switched BC off, and that did the trick.

I guess I can live with non-transparent PNGs in IE as long as their size is correct

I've been setting up a blog using Firefox, experiencing no problems whatsoever :)
However, I switched to IE just to check the site, and discovered that some images gets distorted. I've put up some screenshots:

How it looks in Internet Explorer (images are distorted)
How it looks in Firefox ...