If the background doesn't or didn't work to your liking did you try cell padding in the thumbnail_bit.html?
By default I do not believe there is any (unless it is in css - which I didnt look close).
To start you can make a setting like so: cellpadding="5"
then adjust it to your liking if it works. I have not tried it, but I did have it in my code as "0" (part of the
WallPaper Template).
Here is my original HTML for thumbnail_bit.html looked like (with a little modifications):
<table width="100%" border="0" cellpadding="7" cellspacing="0">
<tr>
<td height="212" align="center" valign="middle" class="thumb" onmouseover="this.className='thumb2'" onmouseout="this.className='thumb'"><!-- you wish detail page in a small javascript open window, use {thumbnail_openwindow} -->
<table width="118" height="124" border="0" cellpadding="0" background="{template_url}/images/bg2.gif">
<tr>
<td align="center" valign="middle"><table border="0" cellpadding="0" background="{template_url}/images/lc.gif">
<tr>
<td>{thumbnail}{if image_is_new}<br />
<div align="center" ><sup class="new">{lang_new}</sup>{endif image_is_new}</div></td>
</tr>
</table></td>
</tr>
</table>
<p>{lightbox_button}<br>
<b>{image_name}</b> ({user_name_link})<br>
<a href="{cat_url}">{cat_name}</a><br />
{if allow_comments}{lang_comments} {image_comments}{endif allow_comments} </td>
</tr>
</table>