So what I'm getting is my image with white background showing in image block. Just like with any image you have white space around actual image. I don't want that to show up. Hopefully i'm explaining this properly.
I think we are all on the same page. Now when i explorer other websites that use images they do have white backgrounds as well when I check out the image itself but when displayed on website its transparent. For instance check out this site: link text and click on Simple Example button. you will see icon next to text in box. How are they making the white background be transparent?
Assuming you have an image with a white background, I would open up the png in photoshop and delete the background layer, and then make it a transparent png. That way, the background behind the image will come through.
You need to edit your image and make the background transparent.
Note that it will not work in IE6, unless you use a filter.
Png files have the ability to have transparency. But that doesn't mean that the image has any transparency set. I'd first check the image to see what's up.
Aside from that I don't see anything that would cause the whitespace... There doesn't seem to be any styles in your code above targeting the image itself.
Feel free to follow up with questions, and I'll be happy to help you troubleshoot.