It is a problem with how the TreeViewMenu HTML tag has been defined in the VerticalMenu control.
The problem is, in fact, 2 folded:
1. The first part is in the TreeViewMenu control, BuildTree method, where the Level.ToLower method is used, regardless of the Level value. When 'Level' property is null, the BuilTree method will raise the above exception. So first step would be to check the Level property before using ToLower on it. And that will take care of the Exception.
2. The second part lays in the actual definition of the dnn:TreeView HTML tag in the Vertical Menu ascx control. In earlier versions level property was defined as 'root', but the later version will simply define only ID and Runat properties. If you define level='root' in the dnn:TreeView tag, then you won't see the exception even if you skip #1.
Hope it helps,
Alicia