Add a closing DIV statement before the following code in your browse_template:
That should take care of the floating boxes. Why the thumbnails aren't all the way to the left I'm not sure. I cannot figure it out, but I can move them to the left. Add the following to your /templates/pixelfy2.0/styles/hoverbox.css file (overwrite the old code for that section:
As for the thumbnails being of poor quality: you're letting the browser do the resizing (blow them up) which leads to poor quality. In my view it should be the other way around: the thumbnails should be as large as you want them in the hoover and let the browser scale them down on the list by restricting the width and height of the hoverbox img in the css file to specific dimensions. That way the small ones might look bad, but the large ones look considerably better.
While you're add it:
In the pagination of the hooverbox a HTML link element is closed in the wrong way:
<a class='hoverbox_pagination_disabled' href='index.php?x=browse&category=&pagenum=1' />1</a>
The / right after pagenum=1' isn't allowed there.