Hi,
Some of the core xfce4 libs don't like to be installed on a different medium. I avoid problems by installing the base system (= xfce4_4.2.2_armv5tel.ipk) to /.
If you don't have the drop-down menu, the desktop likely crashed (this is bad). Probably one of your libs is broken (this happened to me on SD and HD, never on /).
- Remove .config and .cache
- ipkg remove xfce4
- Try reinstalling to /
Then, before fiddling, launch an aterm.
When you try to add the menu to the panel, and the panel disappaers, try bringing it back with the aterm (# xfce4-panel &).
The "crashing panel" is an xfce related bug, it has been solved in 4.2.3.2, but I haven't found the time to recompile it.
Chero.