I found a solution .. YAY!
I used the solution below and it worked great.
Quote:" I finally found an excellent solution to this problem of blank spaces in the thumbnail display that was posted 7 months ago by Bee Dudler (in July 08). This may help others to find it. It is a simple but effective solution that adds a height:xxx px parameter to the ngg-gallery-thumbnail-box section of nggallery.css. Bee Dudler recommended 310px for the value of xxx for the spacing height between thumbnail rows, but 150px still got rid of all my blank spaces and looked a little better than 310px. Just add the height parameter (height:150px;) to the particular css file that you are using (I was using the default nggallery.css) and use the value that looks best for you when your matrix of thumbnails is displayed. See the original posting for more discussion.
The original post is here; http://wordpress.org/support/topic/plugin-nextgen-gallery-blank-spaces-in-slideshow-thumbnail-display
Hope this helps, it solved my problems.