I have the same problem and I've found out that this starts to happen when there are more than 70 elements in the selectbox.
I have tested it with this small piece of code:
var newhtml = "";
var start = 2013;
for (var x = 0; x < 70; x ++) {
newhtml += "<option value='"+(start-x)+"'>"+(start-x)+"</option>";
}
$(this).html(newhtml);
$(this).msDropDown ();
With this code, no whitespace is added to the page.
If I change '70' to '71' however, whitespace is added.
Edit: It appears to be a problemn with the '.ddChild' element. I have added a "height: 0px" to the css and my problem is gone.
This still happens with a large number of elements, but the exact amount of elements depends on the body height.