Issue is related to No Data. It is apparent that the data you have was original as sheets in a different projection and has been projected, or has been clipped to some sheet cut. Both cases have resulted in NoData values which it is generally better to avoid if possible. If the data was previously projected, see if you can get the original data. Projecting data (especially elevation data) will result in changes to the pixel value which can only degrade the results. One solution is therefore to try and get the data without no data values. This may not be possible. In 9.3 what you need to do is remove the no data values by modifying the footprints using the Recompute footprint by radiometry tool. This will change the footprint so as to clip out the nodata areas and it is preferable shrink the footprint slightly so as to exclude nodata values. It could be problematic though if you do not have some overlap of the actual pixel values. It�??s not clear from the images if this is the case or not. This issue with NoData is solved though at V10. My recommendation, upgrade to V10. V10 is much better at handling no-data values. The issue will disappear. Using V10 recomputing footprints will also not be necessary in this case, although it is still recommended if you have large no data areas and overlapping imagery.