When using the XFCE4 Menu Editor to edit the user menu / xfce menu, I have found
that submenus it creates do not get a little submenu arrow next to them (on the
left), and items dragged from xfce4-appfinder do not arrange themselves under
the submenu in ~/.config/xfce4/desktop/menu.xml.  One has to manually edit the
XML and add an application entry under the submenu for the proper visual
annotation of a submenu to be displayed (i.e. the little collapse/expand
triangle), and for drag and drop from xfce4-appfinder to put subsequent items
under the submenu.
Basically this is probably a display problem within xfce4-menueditor rather than
a bug being placed in menu.xml, since one can manually edit it, etc.  The
entries looked correct in menu.xml.

Reproducible: Always
Steps to Reproduce:
1. Open xfce4-menueditor.
2. Create submenu.
3. No expand/collapse icon.
4. Close xfce4-menueditor.
5. Manually add an application entry under the submenu entry in menu.xml.
6. Save menu.xml and exit pico.
7. Run xfce4-menueditor, application and expand/collapse icon visible now.
8. Close xfce4-menueditor.
9. Delete any submenu's application links (empty submenu).
10. Open xfce4-menueditor, that submenu loses expand/collapse icon.
Actual Results:  
(Results are listed inline with steps)

Expected Results:  
You should be getting an expand/collapse symbol with the submenu, but you don't.
 Additionally, drag'n'drop from xfce4-appfinder should put dragged items under
submenu, but won't do so without that expand/collapse symbol being displayed.

Slackware 10.1 with stock XFCE 4.2.0 ....  I will be upgrading to 4.2.1.1
tonight and I will list the results.