I seem to have run into a bug with the image preview functionality. It's a little difficult to explain but I'll give it a shot.
When you click the image preview for a photo, the "lightbox" type popup window comes up very small, so small you can only see the previous/next arrows and close/resize controls. You can drag this out to make it bigger but it messes up the aspect ratio.
The second part of this problem comes when you click either next or previous; the entire image box shifts down ~200 pixels. This continues to happen with each consecutive click on the next/previous buttons until the entire image box is partially off the browser window.
I made a quick recording to illustrate this issue here:
http://www.screencast.com/t/9V4WEdeYSiI used the latest version of HFS 2.3 beta build 272 and the Live template v3.0.1. Tested in Chrome 8, Internet Explorer 8 and Firefox 3.5 using Windows 7 x64 and x86.