You can see how that's done in the manual. Go here:
http://www.vbulletin.com/manual/ , select a vb3 version from the dropdown, then navigate to Styles & Templates > Vbulletin Style Reference > Templates > vBMenu Popup Menus. You can also look at the existing navbar template and see how it's done in there.
One thing I think is worth mentioning: adding a menu involves two template changes: one where you want the menu to appear, and another where the menu is defined.
Also FYI, vb4 doesn't use the same system.