The js is adding a nested div with overflow:hidden and then revealing the submenu on hover. However the element is still in the flow and taking up space and this actions automatically hides sub menus.
The basics are that you set the nested ul to position:absolute and hide it off screen and then on hover bring the menu back into view while at the same time hiding any further nested menus.... and so on.
You should use something like the [suckerfish menus to start with and then [URL="http://users.tpg.com.au/j_birch/plugins/superfish/"]layer js on to](http://www.htmldog.com/articles/suckerfish/dropdowns/)p if needed.
I can move the thread to the JS forum if you want to continue with the mootools approach.