The flatness in the book’s spine is on account of your formatting on the ToC page. With each section centre-aligned in a single column like that, it is deriving no structure from the layout and produces a flat list. If for example you select the items you want in the ToC, and use the Edit/Copy Special/Copy Documents as Structured Link List and leave the indentation intact, you should see subsections in the ToC. Accordingly, I would say the flat centre-aligned column look is better for books that don’t need structure in the ToC.
I would also suggest putting a “Heading 1” title on this page. It may not be necessary for Mobi (it is for ePub), but in my testing it improves the layout. I got some strange results when I left a title off of this page as you did. Perhaps the title space glitch is a result of that.
If that doesn’t do the trick, to better see what is going on there, I would go into the gear tab in compile overview and check off Save source files in a folder with exported Kindle file. There will be a “contents.xhtml” file in the output folder, how does that look?
Likewise, if you examine the CSS/stylesheet.css file, you will find this line:
/* Images */
img { display: block; margin: 1rem auto 1rem auto; }
That would explain why your images are centre-aligned. While you’re looking at the HTML files, you’ll note that images are identified by their file name—that would in theory give you a place to add an override in the CSS pane, for example:
#imageid { margin: 1rem 0 1rem 0; }
But there is an unfortunate flaw in the implementation at the moment, whereby the file extension of the image is included in the ID, and the use of periods in an ID is invalid CSS—or rather #imageid.png technically means element with the ID “imageid” that is also assigned to the class “png”.
I’ll have to get back with you on that one. By the way so many of these things could be fixed with direct editing of the source files or an ePub->Mobi workfow with an editor in the middle. It’s nice to get things one-shot out of the compiler, but if you’re on a publication deadline I’d just be getting thing out. Up to you—but I always switch to post-compile antics when down to the wire on a project. I can get the process streamlined later for one-click updates.