Also, what version of dreamweaver are you using and what server language you're using?
I am using DW CS4 windows XP, PHP
I firsty tried to add two dynamic menues and applied some basic styling, no images.... got the issue
I then deleted cache and tried the same thing about 3 more times each time deleting the Cache - I also tried at that point restarting the pc, tried again same issue.
I un-installed the extension, re-installed, restarted PC - tried again - same issue.
I then decided to try inserting CSS MW with the default values nothing altered - got the same issue...
deleted the cache - tried again with default values - same issue