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Site Menu control is using RadMenu for ASP.NET AJAX bound to a SiteMapDataSource. Indeed the RadMenu has some built in padding style rules. In order to see which classes apply to the RadMenu's submenu items, please take a look at the following article: RadMenu CSS Skin File Selectors
. I can also suggest that you also take a look at this KB article for best practices on styling RadControls for ASP.NET AJAX within Sitefinity
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