Whoops, should have included this bit too;
After opening the skin in SKS6 and changing the BMP titlebar height to 23 all problems went away. But I also noticed something else, take a look at the Back/Foward buttons on each image, after setting the top frame height to 23 they seem different....like it actually should look, it seems like the first image is less transparent giving it a darker look?

I forgot to mention this is 64 bit Vista Ultimate, here is the system info:
Your computer has a Windows Experience Index base score of 5.4
Your Windows Graphics Experience score is 5.9
WindowBlinds version : WindowBlinds 6.0 (build 52 x86 - Vista Edition) - 64 bit OS
WindowBlinds is installed correctly on this PC
WindowBlinds appears to be activated on this PC
(Dell E207WFP) 1 is attached to Radeon X1950 Series
Wblind.dll 2007/10/08 18:07:20
Wblind64.dll 2007/10/08 18:07:06
Wbsrv.dll 2007/09/27 17:47:05
Wbconfig.exe 2007/10/04 17:58:33
Wbload.exe 2007/09/27 17:47:44
Wbhelp.dll 2007/08/27 11:54:07
Tray.dll 2007/09/12 17:58:21
Wbload.dll 2007/09/26 12:53:28
Screen.exe 2007/09/26 14:42:52
Ive tried other skins, maybe its specific to ones with a higher titlebar height? Molten doesn't have this issue and its top frame height is 25 rather than Optix's 29...
EDIT: I've tried a few skins, so far the ones that do have the Icon/Nav Bar issue are StingRay, Camaro and Optix. Skins that don't have the issue are Molten, Classic, Diamond and Leo.