The DNN editor automatically ads a paragraph tag "<p></p>"
around your item. A paragraph normally has a marging around it which is
why you see a white space. To counter this you can simply define a
margin of 0 for paragraph tags in the rotator. for example:
.Rotator_Elegant .items p
{
margin: 0;
}
You can add this to your page's skin css file or to the rotator css
file. Please read the following article regarding
the best way to edit/create a skin for the rotator module.