You need to edit the spmenu.js file. Search for "100%" and you will see a part with height=100% inside of a "if display=vertical" argument. There are actually probably two of them. Backup your file, delete the height=100% section (I think you only need to delete the first one), and then overwrite (make sure you have your backup) the file on your server.
Reload your webpage, and it should work fine.
If you ever decide to switch to a horizontal menu, there is a similar part about the width=100% in that section.