I'd assign as close a background-color to the tile as possible so if the image doesn't tile, at least the color is close, then not sweat it... BECAUSE 'IE5.x' is 'dead to me'. I refuse to continue supporting it because it's >7 year old technology now, and is 5 years out of the latest.
I realize this leaves 'system' users high and dry, but you know what? Get a real computer.
Although if I were to venture a guess, I'd say that margin-top:-200 and padding-top:200 are your cause - frankly, what are you doing in your layout that warrants this? (but then I consider trying to do min/max height to be semi-foolhardy and an effort in futility)... if you yank the repeat-y and let it repeat in both dimensions, does it show up? If so, try adding 0px 200px to it, and see what happens.