The white space is easy
Open up ubbthreads.tmpl and remove these lines
<tr>
<td colspan="5" class="cleartable"><img src="{$config['images']}/blank.gif" width="1" height="1" alt="*" /></td>
</tr>
Separating the categories is not that touch either but requires a bit more work than that. I will get back to ya on that as I have not done that for a couple of versions now.