your page is missing the doctype tag.
without a doctype tag, IE will use quirks mode to display the page. Quirks mode uses the IE 5 rendering engine which does support the CSS Elements needed for the spry menu to display the sub menus.
add the following doctype tag just before the opening <html> tag:
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd">