When you are previewing your pages in DW you are actually viewing a copy of the page from the testing server that you have defined for your site. You need to ensure that the page is being served from a web server, either a local testing server or a live web server. As you noted the menu will work fine when it is served from a web server.
There does not seem to be any problem with your CSS Menu Writer, you just need to setup your testing server correctly before you can preview the menu. We have some docs on setting up a local testing server and defining the site properly in DW. I'm not sure if the testing server setup covers the older G5 computers, it might be specific to Intel based machines:
Testing server for Mac
Defining a dynamic site