I've just recently started to do online proofing with my new photography business. Currently I am creating a photo gallery with Adobe Photoshop 5.0 and pasting the link on my website for the client to click on and view their proofs in a slideshow presentation. It's free for now.
Recently used this to make an online web gallery. It will convert to lower resolution jpgs automatically. What you end up with is a single folder with everything needed.
I then burn it to CD and use that to present proofs using a web browser.
It includes templates with various styles that include adding a style frame around the photos.... Some of the frames are a bit abnoxious but it further prevents people from using the proofs to make prints.