Hi Kimi,
Maybe adding { height: 1%; } to the #container? [1]
See testpage 
<http://home.tiscali.nl/developerscorner/css-discuss/test-njlada.htm>.

Greetings,
francky

PS:
If you replace the transparent blueblue.png by a blueblue.gif 
<http://home.tiscali.nl/developerscorner/css-discuss/images/bluebluebg.gif>,
then IE can handle it (without otherwise needed png-hacks).

[1]
It is one of the "not HavingLayout" manifestations of IE. See Ingo's 
OnHavingLayout article <http://www.satzansatz.de/cssd/onhavinglayout.html>.
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