Its your CSS.
Check out: http://www.quirksmode.org/css/cursor.html
and
Also: http://www.learnwebdesignonline.com/css-tutorials/cursor-hand-pointer.htm
Sometimes we have to cater for I.E. 5.5 users, and so we end up with these problems.  Only way around this is conditional CSS (per browser).

Check out your link from W3C validator...
http://www.dotnetnuke.com/Portals/_default/Skins/DNN-Minimal/skin.css

You have a whole lot of cursor hand popping up in your skin.css file.

.ModuleTitle_MenuBar {
    cursor: pointer;
    cursor: hand;
    height:16;
    background-color: Transparent;
}

.ModuleTitle_MenuItem {
    cursor: pointer;
    cursor: hand;
    color: black;
    font-size: 9pt;
    font-style: normal;
    border-left: white 0px solid;
    border-bottom: white 1px solid;
    border-top: white 1px solid;
    border-right: white 0px solid;
    background-color: Transparent;
}

.ModuleTitle_MenuIcon {
    cursor: pointer;
    cursor: hand;
    background-color: #EEEEEE;
    border-left: #EEEEEE 1px solid;
    border-bottom: #EEEEEE 1px solid;
    border-top: #EEEEEE 1px solid;
    text-align: center;
    width: 15;
    height: 21;
}


You say even if you remove it won't validate...  Does seem odd.  I use solpart all the time, and I've never actually bothered trying to validate it beyond the same error (always  thought it was just the CSS).  Try remove the solpart control from you skin html / ascx file, and the cursor pointer from the css, and run the validation query again.  If it validates you know its deinitely the solpart control.  Not sure if you've tried that...  Seems pretty obvious process of elimination.  But...  at least you'll be sure.  I know the .js file for solpart control also has an arb <tr> in in right at the end of the script that IE picks up and adds like 5 px to the bottom of your menu.  Can be annoying.

Sorry not much help.  Please let us know if you find an answer...