BuddyPress.org

bp-default theme – which admittedly you are not running – doesn’t use the newer WP menus system yet will do with 1.3 release.

Sadly with BP disabled and no drop downs working it’s hard to sat what’s the cause, not really sure why someone suggested you post here, this forum supports the BP core plugin and default theme with neither in operation your issue rests with the theme you are using or some change you made; what happens if you drop back to the WP default theme twentyten?