Just wanted to give the developer and plugin users a heads up that the current version has significant compatibility issues with IE 7 and possibly IE 9. It displays a broken image, and has some margin/height/width side-effects that don't show up in Firefox or Chrome.
I recommend folks double check their sites in different versions of IE. The solution involves playing with the nivo CSS. Sadly, I didn't document the precise solution at the time I was working on it. Perhaps a new version of the plugin could feature updated CSS that will resolve the issue. Thanks!