I think it is the line breaks after the <td> element is opened.
You're also working in quirks mode in IE, this is because of the presence of the XML declaration. If you ditch the XML declaration, you'll be in standards mode, and I think this problem goes away.
Otherwise you can remove the whitespace between the <td> and the cell content (as well as between the end of the content and the closing </td> tag), and your problem is solved.
You could also use <div> tags instead of tables. I would suggest[list], since they are more correct for this usage from a semantic standpoint, but IE also suffers from whitespace bugs with list elements. These bugs are easier to solve (at least from my experience) in standards mode. I've had the best luck with <div> elements.
Regards,
Rich
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