I think you need to revisit the script page and look at the example code again (you didnt provide a link but it appears to be this one: http://www.dynamicdrive.com/style/csslibrary/item/jquery_multi_level_css_menu_2/ )
The example shows one lowest level list with nested lists for sub-menus.
Yours shows many lowest level lists each with their own scrambled nested lists for sub-menus. You closing tags are all over the place so that why you're having problems.
The colours might help you understand the nesting method a little better;
<ul>
<li><a href="http://www.dynamicdrive.com">Item 1</a></li>
<li><a href="#">Item 2</a></li>
<li><a href="#">Folder 1</a>
<ul>
<li><a href="#">Sub Item 1.1</a></li>
<li><a href="#">Sub Item 1.2</a></li>
<li><a href="#">Sub Item 1.3</a></li>
<li><a href="#">Sub Item 1.4</a></li>
</ul>
</li>
<li><a href="#">Item 3</a></li>
<li><a href="#">Folder 2</a>
<ul>
<li><a href="#">Sub Item 2.1</a></li>
<li><a href="#">Folder 2.1</a>
<ul>
<li><a href="#">Sub Item 2.1.1</a></li>
<li><a href="#">Sub Item 2.1.2</a></li>
<li><a href="#">Folder 3.1.1</a>
<ul>
<li><a href="#">Sub Item 3.1.1.1</a></li>
<li><a href="#">Sub Item 3.1.1.2</a></li>
<li><a href="#">Sub Item 3.1.1.3</a></li>
<li><a href="#">Sub Item 3.1.1.4</a></li>
<li><a href="#">Sub Item 3.1.1.5</a></li>
</ul>
</li>
<li><a href="#">Sub Item 2.1.4</a></li>
</ul>
</li>
</ul>
</li>
<li><a href="http://www.dynamicdrive.com/style/">Item 4</a></li>
</ul>
So, its one base-level list (black).
The first level nested lists (purple and blue) are the first level sub-menus.
The blue first level nested list then contains another red nested list, which in turn contains a further green nested list, forming a 2nd sub-menu and 3rd sub-menu respectively.
This is the format you should use when you code your menu.