First off, I'll be moving this topic to the SCLogin forums area after I post this. We just added that forum today (and cleaned things up a bit), so look for the post there.
As to your question, I'm a little confused actually. I'm assuming you're using the new v5.0beta, but if not, let us know. If so, the Modal mode is only for the Login popup. The modal setting doesn't have an effect on the Logout view. The "Welcome" message is only for the logout view, so they shouldn't be related.
When the "Greeting" setting is set to "None", there shouldn't be any extra height added to the module. When that's set to None, the div around the greeting is completely removed from the page, so there shouldn't be any extra spacing there.
If that doesn't help, can you let us know a page where we can see the module in action so we can see what's happening?
Thanks,
Alex