Its very weird, nothing to do with DIV, I was wrong. It seems a large amount of space above the editor and some space below the editor causes the menus to float off. Create the following simple page and let me know if your submenus pop up way below the main menu
<%@ Page Language="VB" %>
<%@ Register TagPrefix="CE" Namespace="CuteEditor" Assembly="CuteEditor" %>
<script runat="server">
</script>
<html>
<body style="font-family:arial">
<form runat="server">
<br />
<br><Br><br><br><br><br><br>
<br><Br><br><br><br><br><br>
<br><Br><br><br><br><br><br>
<br><Br><br><br><br><br><br>
<CE:Editor id="ceContent" runat="server" width="650" EnableStripScriptTags="false"
UseHttpHandlerCacheImages="True" height="550"></CE:Editor>
<br><Br><br><br>
</form>
</body>
</html>