OK, after doing a bit of research thanks to Scott's suggestion about the IE7 z-index being the issue, I found the solution
The trouble was my containing elements (div#header and div#mainContent) needed to be assigned z-index values for IE7 to resolve this issue.
The IE z-index issue:
I really like this dropdown menu and in Firefox (as almost always) everything worked properly. But then I tested in IE. The source code was similar to this
<div id='header'>
<div id='nav' class='sf-menu'>Here the menu</div>
</div>
<div id='content'>Here the content</div>
Both the header and the content div have position:relative. In IE the dropdown menu was displayed under the content div so the links in the dropdown were not clickable though the z-index of the menu list was set to 100.
The fix is so simpel:
#header {
z-index:2;
}
#content {
z-index:1;
}