Hi Nicky,

The reason the third level menu is hidden is because of the way your CSS is handling it.  The parent menu item needs to keep the "selected" class.

Here's an updated XSLT for you:

<?xml version="1.0" encoding="utf-8"?>
<!DOCTYPE xsl:Stylesheet [
    <!ENTITY nbsp "&#x00A0;">
]>
<xsl:stylesheet
    version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
    xmlns:msxml="urn:schemas-microsoft-com:xslt"
    xmlns:umbraco.library="urn:umbraco.library"
    exclude-result-prefixes="msxml umbraco.library">
    <xsl:output method="xml" omit-xml-declaration="yes"/>

    <xsl:param name="currentPage"/>
    <xsl:param name="level" select="2"/>

    <xsl:template match="/">
        <div class="leftmenu">
            <xsl:call-template name="menu">
                <xsl:with-param name="level" select="$level"/>
            </xsl:call-template>
        </div>
    </xsl:template>

    <xsl:template name="menu">
        <xsl:param name="level"/>
        <ul class="level_{@level}">
            <xsl:if test="count($currentPage/ancestor-or-self::node [@level=$level]/node [string(data [@alias='umbracoNaviHide']) != '1']) &gt; '0'">
                <xsl:for-each select="$currentPage/ancestor-or-self::node [@level=$level]/node [string(data [@alias='umbracoNaviHide']) != '1']">
                    <li>
                        <xsl:if test="$currentPage/@id = @id or $currentPage/ancestor-or-self::node/@id = @id">
                            <xsl:attribute name="class">selected</xsl:attribute>
                        </xsl:if>
                        <a href="{umbraco.library:NiceUrl(@id)}">
                            <xsl:if test="$currentPage/@id = @id or $currentPage/ancestor-or-self::node/@id = @id">
                                <xsl:attribute name="class">selected</xsl:attribute>
                            </xsl:if>
                            <xsl:value-of select="@nodeName"/>
                        </a>
                        <xsl:if test="count(current()/node [string(data [@alias='umbracoNaviHide']) != '1']) &gt; '0'">
                            <xsl:call-template name="submenu">
                                <xsl:with-param name="level" select="$level+1"/>
                            </xsl:call-template>
                        </xsl:if>
                    </li>
                </xsl:for-each>
            </xsl:if>
        </ul>
    </xsl:template>

    <xsl:template name="submenu">
        <xsl:param name="level"/>
        <ul class="level_{@level}">
            <xsl:for-each select="current()/node [string(data [@alias='umbracoNaviHide']) != '1']">
                <li>
                    <a href="{umbraco.library:NiceUrl(@id)}">
                        <xsl:if test="$currentPage/@id = current()/@id">
                            <xsl:attribute name="class">Selected</xsl:attribute>
                        </xsl:if>
                        <xsl:value-of select="@nodeName"/>
                    </a>
                </li>
            </xsl:for-each>
        </ul>
    </xsl:template>

</xsl:stylesheet>

Cheers, Lee.