I would like to be able to set sub-menu items to adjust dynamically to the width of the content, rather than be split as her on my test site http://www.incaweb.co.uk (public courses/course menu). I am using a WP 3.1 custom menu.

I find the lack of options in WP and the existence of an Atuhualpa menu tab which is apparently not used now all very confusing.

The setting in the Atahualpa menu section are still used. Just set the sub-menu width.