I am not sure I quite understand the problem with the size of the images. Some of the white on either side of the image is actually part of the image. If you want to get rid of it you need to edit the image and then re-upload it.
As far as the margins:
There are quite a few empty elements in the layout that are actually taking up space. Also some <br> tags that make formatting tricky. Look at the code from your site below. I'll try to highlight them in red.
Code:
<!--// bof: bannerboxall //-->
<div class="leftBoxContainer" id="bannerboxall" style="width: 159">
<h3 class="leftBoxHeading" id="bannerboxallHeading"></h3>
<div id="bannerboxallContent" class="sideBoxContent centeredContent"><a href="http://www.orcharddirect.co.uk/shop/index.php?main_page=redirect&action=banner&goto=2&zenid=06223be65ee81f9dc14ad4b3edcb3aaa" target="_blank"><img src="images/lorrygif.gif" alt="Free Delivery On Orders Over £75" title=" Free Delivery On Orders Over £75 " width="159" height="73" /></a><br /><br /><a href="http://www.orcharddirect.co.uk/shop/index.php?main_page=redirect&action=banner&goto=10&zenid=06223be65ee81f9dc14ad4b3edcb3aaa" target="_blank"><img src="images/fsb.JPG" alt="FSB" title=" FSB " width="150" height="145" /></a></div></div>
<!--// eof: bannerboxall //-->
<!--// bof: protxformcardsaccepted //-->
<div class="leftBoxContainer" id="protxformcardsaccepted" style="width: 159">
<h3 class="leftBoxHeading" id="protxformcardsacceptedHeading">Cards Accepted</h3>
<div id="protxformcardsacceptedContent" class="sideBoxContent centeredContent">
<div style="clear: left;"> </div>
<img src="includes/templates/template_default/images/card_icons/verified_by_visa_small.png" alt="Verified By Visa" title=" Verified By Visa " width="1" height="1" class="ProtxFormCardsAcceptedSidebox3DSecureIcon" />
<img src="includes/templates/template_default/images/card_icons/mastercard_securecode_small.png" alt="MasterCard SecureCode" title=" MasterCard SecureCode " width="1" height="1" class="ProtxFormCardsAcceptedSidebox3DSecureIcon" />
<div style="clear: left;"> </div>
<img src="includes/templates/template_default/images/card_icons/protx_secured.png" alt="Secured by Protx" title=" Secured by Protx " width="150" height="389" class="ProtxFormCardsAcceptedSideboxProtxIcon" />
</div></div>
<!--// eof: protxformcardsaccepted //-->
</div>
This is a non standard sidebox so without seeing the code that created it, it is hard to comment further.