For the javascript errors, try deleting the Dreamweaver cache file from the user configuration folder:
common_installation_issues.pdf
You should not be editing the menu structure in the source code, you should be editing the menu structure using the CSS Menu Writer wizard so that the correct CSS will be generated to handle the extra levels of menu that you add. Editing the structure by hand will not allow the css for the level 2 and level 3 menus to be generated.