I had some time left after all, and remembered that IE has an analyses tool, too, similar to Firebug. And I found the cause of the problem: the float:left that you gave the #menu... I don't know why, but I guess it is an IE bug. Although you shouldn't use float there, I would think.
While you are at it, have a look at my latest tutorial, or at least the live example the tut will cover:
How to turn a menu into a mouse hover and touchscreen onclick menu. Because your menu won't work on the latter, as there is no hovering on touchscreens...