That is too wierd.
I'm just starting to use PHPlib right now and I haven't had any issue like that at all.
I would venture this guess: it's not PHPlib template.inc that is doing this . . . there's nothing in it that would create this.
The entirely dead stupid obvious question is: are your images links? If they are, there will be some code like this:
<a href="image.gif"><img height="32" width="32" src="/images"></a>
Right after "/images" and before the > you'll have to add this: border="0" .
But I'm sure this is not your problem ... that would be too obvious.
Hope you find it!
-john