You can increase the height. The height should equal your images plus the 15 or so pixels that the scrollbar takes up.
If I can suggest one thing, the unnecessary use of frames here is really bugging be. I'd recommend going for just one HTML page and code like this:
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01//EN" "http://www.w3.org/TR/html4/strict.dtd">
<html>
<head>
<title>Make Over Magic</title>
<style type="text/css">
html,body { background-color:#000; padding:0; margin:0; }
#images { width:100%; overflow-x:auto; height:490px; overflow-y:hidden; }
#images ul { margin:0; padding:0; list-style:none; width:1680px; }
#images ul li { display:inline; }
</style>
</head>
<body>
<div id="header">
<img src="http://www.makeovermagic.org/banner.jpg" alt="Make Over Magic">
</div>
<div id="images">
<ul>
<li><img src="http://www.makeovermagic.org/O470.jpg" alt=""></li>
<li><img src="http://www.makeovermagic.org/J470.jpg" alt=""></li>
<li><img src="http://www.makeovermagic.org/I470.jpg" alt=""></li>
<li><img src="http://www.makeovermagic.org/R470.jpg" alt=""></li>
<li><img src="http://www.makeovermagic.org/K470.jpg" alt=""></li>
</ul>
</div>
<div id="footer">
© Make Over Magic
</div>
</body>
</html>
I'm not sure what all that javascript was for on your current website. But that can be added back in.
To add more images, you would simply add another element to the unordered list, like so:
<li><img src="path/to/image" alt="caption/title"></li>
and you would need to edit the highlighted portion below to specify the total width of the scrolling panel.
#images ul { margin:0; padding:0; list-style:none; width:1680px; }
You could also look into using some javascript for the scrolling bit. I recommend using the jCarousel (http://sorgalla.com/jcarousel/) plugin for jQuery (http://jquery.com/). My personal opinion about using the overflow:auto property to display a scrollbar is that it takes away a lot more in aesthetics than it adds in functionality. I usually will always side with form vs. function except on scrollbars. I find the default browser scrollbars to be ugly. So, I prefer javascript.
Anyway, that should solve all your woes.