I was wanting to do that exact same thing earlier tonight so I sat down to figure it out. At first I was having trouble getting it so each DAY was within a box. I had it either the entire list of entries in one box (like your's is currently) or each invdividual entry was in a box (which wouldn't have been bad as long as I had the date at the top of each box - which I didn't and didn't really want).
So, that said, here goes:
CODE
<MTEntries>
<$MTEntryTrackbackData$>
<MTDateHeader>
<div class="blogbox">
<h2 class="date">
<$MTEntryDate format="%x"$>
</h2>
</MTDateHeader>
<a name="<$MTEntryID pad="1"$>"></a>
<h3 class="title"><$MTEntryTitle$></h3>
<div class="blogbody">
<$MTEntryBody$>
<MTEntryIfExtended>
<span class="extended"><a href="<$MTEntryPermalink$>">Continue reading "<$MTEntryTitle$>"</a></span><br />
</MTEntryIfExtended>
<div class="posted">Posted by <$MTEntryAuthor$> at <a href="<$MTEntryPermalink$>"><$MTEntryDate format="%X"$></a>
<MTEntryIfAllowComments>
| <a href="<$MTCGIPath$><$MTCommentScript$>?entry_id=<$MTEntryID$>" onclick="OpenComments(this.href); return false">Comments (<$MTEntryCommentCount$>)</a>
</MTEntryIfAllowComments>
<MTEntryIfAllowPings>
| <a href="<$MTCGIPath$><$MTTrackbackScript$>?__mode=view&entry_id=<$MTEntryID$>" onclick="OpenTrackback(this.href); return false">TrackBack (<$MTEntryTrackbackCount$>)</a>
</MTEntryIfAllowPings>
</div>
</div>
<MTDateFooter>
</div>
</MTDateFooter>
</MTEntries>
The key pieces of info you want to make note of in there are the
div="blogbox" inside the
MTDateHeader and the
/div inside the
MTDateFooter. The actual class "blogbox" contains two elements: border=1px solid #000; and margin-bottom=5px; (to allow for a slight space between days.
For an example of what I mean visit my site
here. Note that this is basically the original template that has been changed only slightly. I haven't had a chance to sit down and re-do the layout to the way it was when I used blogger and then greymatter. someday, someday...