So, I'm working on a new site for these folks, and put together my menu in a standalone file:

http://www.tkstudios.org/testing/menu_dev_2.html
Checked out OK in: IE6(albeit a bit wonky), IE7, Firefox

Satisfied with those results, I go and stick it into the layout itself:
http://www.tkstudios.org/testing/sitelayout.html

Annnnd....
It breaks in IE6 *and* IE7.
And I can't, for the life of me, figure out WHY. There are zero code changes to the menu between the two files, most of the new CSS in the layout itself should have no effects on the menu... been poking at this for hours and having no luck.

Edit: Further baffling is that only the FIRST item in each list causes the dropdown to break: if you whip your mouse down the the lower items, they work just fine. It's just the very first item that screws everything up. Still no luck with this after about 4 hours of tinkering today.

Example:
Top Level Item (OK)
--Second Level Item 1 <- broken
----Third Level Item 1 <- broken
----Third Level Item 2 <- OK
----Third Level Item 3 <- OK
--Second Level Item 2 <- OK
--Second Level item 3 <- OK

Any and all help would be greatly appreciated, you guys are my last hope before Drastic Actions™.
(for the curious, the mockup is available here)

Oh, and Hi. First post here. Nice to see a friendly forum for once. Hope to become a bit more active. :)

Edit #2:
Seems that exiting the containing div#header (or #headcontainer) causes this - Firefox did the same once I slapped some content in the following divs, but I fixed that by positioning the menu absolutely within the header DIV - no such luck with IE, it's still as broken as ever, even after fixing the culprit in FF. Go figure...