The issue you are running into is caused by white-space: nowrap; from .art-hmenu ul a. The reason it is there is because it causes the "li" element to become as wide as the content inside it. It's supposed to act kind of like a table cell when used like this. Unfortunately in IE7 it acts different than other browsers and span only to the width of it's own content instead of the widest "li" element in the group. My thoughts on fixing the menu it to remove all the styling you have on the "a" elements in the sub menu and placing it on it's parent "li" instead, that way your sub menu looks the same and the only difference between newer browsers and IE7 is that the clickable area of the link will not span the entire width of the sub menu but it will span the text.
I hope that helps. Good luck!