I have not delved into the extension that much, so I am making some assumptions here.
UPDATE: I just tested and padding the sub-menu instead of providing a margin still creates the space, but as far as the browser is concerned, the mouse is still over the element so the fly-out menu stays open.
Once you have a live page up and running, please send me a link to further look into these issue.
Well I might be able to provide you a zip of the files. Here is a screen shot:
Did you examine the third question?
Here is a screenshot:
(Note: I reset the left column to a fixed height.)