Not a good idea to jump into a thread with a different problem. Not that it's not allowed, just can easily get passed over if someone thinks they've already addressed the problem.

That said, I think part of your problem is a stray </a> right near the end of your flash embed.
<param name="allowScriptAccess" value="sameDomain" />
<param name="movie" value="/store/includes/templates/template_default/nnez_com/flash/header_bigger2.swf" /><param name="quality" value="high" /><param name="bgcolor" value="#ffffff" /><embed src="/store/includes/templates/nnez_com/header_bigger2.swf" quality="high" bgcolor="#ffffff" width="790" height="307" name="nnez_com" align="middle" allowScriptAccess="sameDomain" type="application/x-shockwave-flash" pluginspage="http://www.macromedia.com/go/getflashplayer" />
</object></noscript></a><br>
Try taking out what I've highlighted in red and see what happens.

You've also got some problems with extra </li>'s in your drop menu and an extra </div>. Again, delete the items in red.
<div id="dropMenu">
<ul class="level1">

<li class="submenu"><a href="http://beautyxpress.com.au/store/index.php?main_page=index">STORE HOME</a>
<ul class="level2">
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=new_products.php">NEW PRODUCTS</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=specials">SPECIALS</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=featured_products">STAFF PICKS</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=products_all">ALL PRODUCTS</a></li>

</ul>
</li>

<li class="submenu"><a href="http://beautyxpress.com.au/store/index.php?main_page=about_us">About Us</a>
<ul class="level2">
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=shippinginfo">SHIPPING & RETURNS</a></li>
<li></li><a href="http://beautyxpress.com.au/store/index.php?main_page=FILENAME_FAQ">FAQ</a></li>

<li><a href="http://beautyxpress.com.au/store/index.php?main_page=privacy">PRIVACY POLICY</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=conditions">CONDITIONS OF USE</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=site_map">SITE MAP</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=unsubscribe">NEWSLETTER UNSUBSCRIBE</a></li>
</ul>
</li>

<li class="submenu"><a href="http://www.beautyxpress.com.au/forum">FORUM</a>

</li>

<li class="submenu"><a href="http://www.beautyxpress.com.au/store/index.php?main_page=index&cPath=wordpress">ARTICLES</a></li>
</li>

<li class="submenu"><a href="http://www.beautyxpress.com.au/store/index.php?main_page=index&cPath=testimonials">TESTIMONIALS</a></li>
</li>

<li class="submenu"><a href="http://beautyxpress.com.au/store/index.php?main_page=contact_us">Contact Us</a></li>
</li>



<!-- You can also add links on this side of your catefories menu
<li class="submenu"><a href="http://beautyxpress.com.au/store/index.php?main_page=index">Information</a>
<ul class="level2">
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=shippinginfo">Shipping Info</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=privacy">Privacy Policy</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=conditions">Conditions of Use</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=about_us">About Us</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=site_map">Site Map</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=gv_faq">Gift Certificate FAQ</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=discount_coupon">Discout Coupons</a></li>
<li><a href="http://beautyxpress.com.au/store/index.php?main_page=unsubscribe">Newsletter Unsubscribe</a></li>
</ul>
</li>
-->

</ul>
</div>
</div>
When you've got a chance, search the forum on flash embeds. You may find it can be a little simpler than the method you used.