try this instread in product_thumbnail
{* $Id: product_thumbnail.tpl,v 1.19.2.1 2007/07/09 05:00:35 svowl Exp $ *}
{if $config.Appearance.show_thumbnails eq "Y" or ($type ne "T" and $type ne "")}<img{if $id ne ''} id="{$id}"{/if} src="{if $tmbn_url}./imager.php/product_thumb.jpg?width={$image_x}&cropratio=1 :1&image={$tmbn_url}{else}{if $full_url}{$http_location}{else}{$xcart_web_dir}{/if}/image.php?type={$type|default:"T"}&id={$produc tid}{/if}"{if $image_x ne 0} width="{$image_x}"{/if}{if $image_y ne 0} height="{$image_y}"{/if} style="margin:5px;" alt="{$product|escape}" />{/if}