No drop down, simply a long text list next to standard menu. Don't know why mine isn't working properly, I have WP2.7 with your latest release 3.1 and have installed and activated is all successfully.
Problem is the menu links instead of being at the top as your graphics show the menu on the left did not change or move and all their associate links are just a long vertical list along side the standard menu.
Am I missing something, is there a configuration wrong? What to do?