Yes, it usually does. I think it depends on your local and remote site settings at the time the menu is created. If your initial site settings - as defined in Dreamweaver - are something like:
Local Site (and testing server):then the assumed site root when the menu is built is the \lynchdemo folder, so the created structure on the remote server wrongly assumes that /index.html file is in your site root (i.e. not your \lynchdemo folder).
If your Dreamweaver Site definition is:
Local Site (and testing server):and you create the menu in a page in the \lynchdemo folder, then the paths should be correct, as the remote site paths are defined as: www.fotash.com (root) /lynchdemo (pages with menus in).
I may me wrong, I may test it later to check. Hopefully a WA tech can advise on Monday.
It would be worth your while (as you are working with a lot of pages on your site - looking good btw) to convert the pages to .php pages, and then have your menu as an 'include' on each page. You would only then have your menu on one file, which all the other pages 'include' (refer to).