I forgot one other thing, use a diffuser of some sort on the flash, to reduce the harshness. Often that will almost completely eliminate a shadow when the subject is close to a wall.
It would appear that you simply rotated the camera to vertical and the flash moved to the right side, pointing sightly up. That accounts for the shadows and the red-eye. You shot this at ISO 1600 which accounts for the noise which will really become noticeable in larger prints. First, move the subject away from the background. Second shoot at a wider aperture. Third, use a good external flash, mounted on a rotating bracket that keeps the flash directly above the lens when you rotate the camera. Fourth, reduce the ISO to 400. These things will greatly improve your shots of this type.
