I believe this is down to IE7's z-index bugs, though I could be wrong. The alternative would be to use images, which isn't something we want to do unless we have to. This may be chalked up to a browser bug.
These are just browser bugs that get resolved when people simply update their browser to the latest stable.
Replacing CSS for all modern browsers with images, because IE is having 'yet another bug', is the vBulletin way.
I don't want to go down that road again and am looking for modern solution forum software.
If you are on IE, use Chrome or Firefox, or at least use IE8, which is currently the latest stable.
The functionality of the breadcrumbs are still working.