The reason you're getting all that space is because of all the top padding and margin you put on the #spotlight yourself. You seem to be adding all that space as a way of making enough room for the floats inside it. Don't do that. Make the div contain its floats by adding overflow: hidden to it. If that has unwanted side-effects, add the clearfix class to it, which is already in your CSS.
The reason you're seeing all that space in IE7 is because the #spotlight has a width, which is triggering layout. That causes it to contain its floats already, pushing all that top margin and padding up above it.
Oh, and don't use multiple id="spotlightbox". That's what classes are for. IDs must be unique. Use class="spotlightbox" instead.