Yes, it was in CSS. If anyone else is using Zetagenesis or Blueshine with piCal as a block. To get rid of the borders around the spacers:

In Zetagenesis: css/blocks.css

After:
#xo-page .xo-blockszone .xo-blockcontent img {
Line 146 change border to 0px and the borders around the spacer images go away.

In Blueshine: style.css
Line 314 .centercol .blockContent img {margin: 5px; border: 1px solid #000000;}

Change border to 0px