The reason you have all of that empty space is because you have all of those links on the right half of the Start menu. If you go to Customize in Properties (Right Click on Start>Properties>[Start menu] Customize...) and deselect a bunch of those links on the right hand side, the total height should shrink. If you want to keep all of those links, you don't really have much of an option, but you can fill that empty space by increasing the number of recent programs to display (via the same Customize menu).
Hope this helps.
Ignore this, I totally missed the fact that there were three pages to this topic. <_<;;;