I have found the code in the forumdisplay, but I'm not sure where it is originating from. From what I can tell I need to modify the table width. Also, I checked the standard MyBB theme and it's doing the same thing.
<table width="5%" cellspacing="0" cellpadding="2" style="white-space: nowrap; border: none">
<tr>
<td>
<img src="images/dreamy20/newfolder.gif" alt="New Posts" /> <span class="smalltext">New Posts</span><br />
<img src="images/dreamy20/newhotfolder.gif" alt="Hot Thread (New)" /> <span class="smalltext">Hot Thread (New)</span><br />
<img src="images/dreamy20/dot_folder.gif" alt="Contains Posts by You" /> <span class="smalltext">Contains Posts by You</span>
</td>
<td>
<img src="images/dreamy20/folder.gif" alt="No New Posts" /> <span class="smalltext">No New Posts</span><br />
<img src="images/dreamy20/hotfolder.gif" alt="Hot Thread (No New)" /> <span class="smalltext">Hot Thread (No New)</span><br />
<img src="images/dreamy20/lockfolder.gif" alt="Locked Thread" /> <span class="smalltext">Locked Thread</span>
</td>
</tr>
</table>