I confirm that IE is not able to stream using the .mpjg syntax (for your reference the .mpjg syntax is well described under "Network Setup" section of web management, also with RTSP syntax).
For full screen with IE, using the video stream 1 (with highest resolution), it's normal to have the scroll bars enabled and visible. Try to use the "zoom out" feature (for example 75% or 50% should help).
Regarding audio, I never hear audio with browsers using .mpjg syntax. If you want to listen audio, you have to use the RTSP syntax (I have no problem with VLC media player using RTSP syntax).
I confirm that with Google Chrome, Mozilla Firefox, Opera and Mozilla SeaMonkey there are no problems on streaming using .mjpg syntax (anyway there is no audio with all these browsers).