I am assuming this is a collabortation portal, is this correct?
Has anyone played with the default.master page? You can look in SharePoint
designer at the history of the file to determine if changes have been made
if not, the perhaps it is a setting in the naviagation. If changes have
been made it will relate to the ASPMenu control for the topnav. This is an
OOB topnav ASPMenu control:
<SharePoint:AspMenu
ID="TopNavigationMenu"
Runat="server"
DataSourceID="topSiteMap"
EnableViewState="false"
AccessKey="<%$Resources:wss,navigation_accesskey%>"
Orientation="Horizontal"
StaticDisplayLevels="2"
MaximumDynamicDisplayLevels="1"
DynamicHorizontalOffset="0"
StaticPopoutImageUrl="/_layouts/images/menudark.gif"
StaticPopoutImageTextFormatString=""
DynamicHoverStyle-BackColor="#CBE3F0"
SkipLinkText=""
StaticSubMenuIndent="0"
CssClass="ms-topNavContainer">
<StaticMenuStyle/>
<StaticMenuItemStyle CssClass="ms-topnav" ItemSpacing="0px"/>
<StaticSelectedStyle CssClass="ms-topnavselected" />
<StaticHoverStyle CssClass="ms-topNavHover" />
<DynamicMenuStyle BackColor="#F2F3F4" BorderColor="#A7B4CE"
BorderWidth="1px"/>
<DynamicMenuItemStyle CssClass="ms-topNavFlyOuts"/>
<DynamicHoverStyle CssClass="ms-topNavFlyOutsHover"/>
<DynamicSelectedStyle CssClass="ms-topNavFlyOutsSelected"/>
</SharePoint:AspMenu>
The change you are talking about would relate to the
MaximumDynamicDisplayLevels property.
If the master has not been modified, then perhaps something has changed in
the top level navigation of your portal. In order for the flyouts to work
as you have outlined, ensure that navigation is setup correctly. Go to Site
Actions> site Setting>Modifiy All Site Settings>Look and Feel> Navigation.
Upon this page ensure that under current Navigation that "Display the
current site, the naviation items below the current site and the site's
siblings" is selected.