Seems like a pure CSS issue. First, make sure you have included “sm-core-css.css” properly on your page. If the issue remains, you may check if the issue persist if you use some of the default themes instead of your theme (which seems to be customized). If the issue remains with the default themes, then it’s most probably caused by some of your other page unordered list styles which override the SmartMenus defaults in “sm-core-css.css”.
In any case if you like, please post some kind of demo URL and I will check what exactly causes the issue and how you could fix it.