I had this same problem a while back. For me it was only on Internet Explorer 8. I HATE Internet Explorer! It works fine on IE9. Unfortunately if you are running Win XP you can't upgrade.
Here is how I solved the problem. Forgive me but it has been awhile and I don't have all the details fresh in my mind. I had to add some code to the Stylesheet (style.css) file.
This basically forces the browser to allocate space for the thumbnails. The code says 208px but I am able to make 800px thumbs for my panoramas at this setting.I have the Mantra theme so all I had to do is add the code to the Custom CSS box on the Mantra settings page.
You can see the results on the link below. Before I added the code these images were all on one row with each image scrunched to about 10px wide.
(I am reworking my site so this link may only work for a few more days)
I hope this helps you. I'm not well versed in PHP or CSS but I dug around and found this workaround.