Folder submenu not appearing

Sorry about posting the wrong place.

This is not a big problem. Most questions are the same for FLB and TLB

I have tried the mouse hover option already, Also before the folders showed an arrow at the end of the name to show it would expand which they are not doing now. Heres a shot of it.

As I see on the screenshot you've added the shortcuts into the menu. Actually you need to delete the button Downloads, right-click in menu and select New->Menu. So FLB create the menu and you can add the shortcuts there.

But I guess you want to show the content of the existing Downloads folder as the menu. This feature presented in the True Launch Bar only (Virtual Folders).