I created 2 level menu (site map is datasource). Menu appeaers perfectly in firefox and opera, but second level menu doesn't appear in IE(both 6 and 7). I didn't understand what's problem. If it doesn't work in Firefox and Opera, I can understand.

 One more problem is that content of content pane is not apearing properly in IE (only half of content pane is visible).

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There is nothing special just one menu control with sitemap datasource. 

<tr>
                <ul id="nav">
                    <td valign="top">
                        <asp:Menu ID="Menu1" runat="server" DataSourceID="SiteMapDataSource1" Width="163px">
                          <StaticSelectedStyle CssClass="menu" />
                          <DynamicMenuItemStyle CssClass="menu" />
                          <StaticHoverStyle CssClass="menu" />
                          <DynamicMenuStyle CssClass="menu" />
                        </asp:Menu>
                    </td>
                    <td colspan="2" class="content" valign="top">
                        <asp:ContentPlaceHolder ID="ContentPlaceHolder1" runat="server">
                        </asp:ContentPlaceHolder>
                        <br />
                        <br />
        <asp:SiteMapDataSource ID="SiteMapDataSource1" runat="server" ShowStartingNode="False" />
                        <br />
                    </td>
                </ul>
            </tr>

Would like to see a snippet of your Sitemap file.

Also, Is the UL tag working inside the TR tag without an error?

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Okay friend, try this, its simple & it works on IE...

Default.aspx

Web.Sitemap

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Here is the coding for site map.

<siteMap xmlns="http://schemas.microsoft.com/AspNet/SiteMap-File-1.0" >
  <siteMapNode url="" title="Managefolio"  description="">
    <siteMapNode url="~/Default.aspx" title="Home" description="Home"/>
    <siteMapNode url="~/Admin/Employees.aspx" title="Employees" description="View/edit all Employees"/>
    <siteMapNode url="~/Admin/Branches.aspx" title="Branches" description="List of Branches"/>
    <siteMapNode url="Clients.aspx" title="Clients" description="All clients"/>
    <siteMapNode url="MFHouse.aspx" title="Mutual Fund House" description="Mutual Fund Houses"/>
    <siteMapNode url="Schemes.aspx" title="Mutual Fund Schemes" description="Mutual Fund Schemes"/>
    <siteMapNode url="MFEntry.aspx" title="Mutual Fund Entry" description="Sell new Mutual Fund"/>
    <siteMapNode url="~/Admin/Default.aspx" title="Administrator" description="Admin section" roles="admin">
      <siteMapNode url="~/Admin/Add Employee.aspx" title="New Employee" description="Add new employee" />
      <siteMapNode url="~/Admin/Add branch.aspx" title="New bracnch" description="Add new Bracnch" />
      <siteMapNode url="~/Admin/Grades.aspx" title="Grades" description="Grade for Branches" />
      <siteMapNode url="~/Admin/Contacts.aspx" title="Contacts" description="All Contacts"/>
      <siteMapNode url="~/Admin/AddMFHouse.aspx" title="Add MF House" description="Add A new Mutual Fund House"/>
      <siteMapNode url="~/Admin/Add scheme.aspx" title="Add new Scheme" description="Add new Scheme"/>
      <siteMapNode url="~/Admin/Payments.aspx" title="Payments" description="Payments byclients"/>
      <siteMapNode url="~/Admin/Commsisions.aspx" title="Commisions" description="Commisions"/>
    </siteMapNode>

  </siteMapNode>
</siteMap>

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I found the issue to my problem. In my case, if I set the id of my Menu component beginning with an underscore (C# convention), then the DHTML behaviour will not work in IE.