You're exactly right! On our server we have a lot of dynamically generated JS files - for menu's generated from DB content etc. This is the first time I have seen a problem with having PHP parse .js files.

I placed the following code at the top of the menu file:
<? header('content-type: text/javascript'); ?>

And voila - the problem went away.

Thanx so much for your help.

PS - Another quick question. I am working on a theme for the Open Source version of SugarCRM. Does you license allow us to use your menu for Open Source projects like this?