1. Navigate to Backend->System->Configuration->Custom Menu. If there is no section in the Backend, the menu is not installed.
2. Please check The list of files of the Custom Menu extension.
3. Check the Menu version in the Backend->System->Configuration->Custom Menu. If you have an older version of the Custom Menu (up to 2.10.2) it does not work if "Hide empty categories" and "Use Flat Catalog Category" are enabled. More info: Custom Menu and Smart Menu Magento extensions were updated
4. If you have an older version of the Custom Menu (up to 1.6.0) it does not work in Magento 1.7.
5. If all the above excluded please check:
-Another extension is incompatible with Custom Menu, or
-Your template does not have the block "catalog.topnav" in the layout.
You should not create catalog.topnav. It should be there, or it is blocked by some routine. You need to find which extension or code blocks top nav layout.
There is a code In the
app \ design \ frontend \ base \ default \ template \ page \ html \ header.phtml
It displays the menu in the default store. Custom Magento menu override this function.
This post is related with Custom Menu free Magento Extension.
Custom Menu is an advanced free Magento menu that you could use for any eCommerce store.