I just installed IE7 and had the same problem with the Links displaying across its own toolbar rather than the drop down menu. This happens when you have the Links on the Menu Bar, then hide the Menu Bar. It causes the Links to make its own bar! I finally got it back to the drop down menu by unlocking the toolbar (make sure Menu Bar is displayed), LEFT click on the word "Links" until you see a 4 directional arrow and drag it up to the above Menu toolbar. From there you can drag it over to the right side where it will compress into the drop down menu you want; then lock the toolbar again. Please note that if you choose to hide your Menu Bar again, the same thing will happen with the Links, even if the Toolbar is locked.
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