Need The Full Term and Node Hierarchy Outputted to Block Menu

Sorry my version of taxonomy_context.module is really 4.6.0

After posting this issue I tried solving this myself, and would like to point out some other issues I found and some code I modified.

I found that the original output of the block menu navigation would have some un-needed and incorrect XHTML. If a term had no nodes under it a blank set unordered list tags would still be outputted. For example...
Original Output:

<div class="menu">
  <ul>
    <li class="expanded"><a href="term1">term1</a></li>
      <ul></ul>
    <li class="collaped"><a href="term2">term2</a></li>
  </ul>
</div>

After finding the function that outputted this list, taxonomy_context_show_children, I found everytime this function is called "

" is outputted not matter what. This function calls itself when checking for child/sub terms and will always output a "

" before it calls and checks for nodes and "

" after. I have re-worked the taxonomy_context_show_children module to check for child/sub terms and nodes before outputting anything.
Modified taxonomy_context_show_children function

function taxonomy_context_show_children($tid, $base = false) {
  static $context;
  if (!isset($context)) {
    $context = taxonomy_context_get_context();
  }
  $parents_str = "";
  $parents_obj = taxonomy_get_parents_all($context->tid);
  foreach ($parents_obj as $p) {
    $parents_str .= $p->tid . ",";
  }
  $parents = explode(",", $parents_str);

  $output = "<ul>\n";
  $children = taxonomy_context_term_children($tid);
  if ($children) {
    foreach ($children as $c) {
      $term = taxonomy_get_term($c);
       $params = array("title" => $term->description ? strip_tags(node_teaser($term->description)) : t("View this section"));
      if ($c == $context->tid) {
        $params["class"] = "active";
      }
      $link = l($term->name, "taxonomy/term/". $term->tid, $params);  

      if (in_array($c, $parents)) {
	  $styleClass = "expanded";
	}
	else {
	  $styleClass = "collapsed drop-down";
	}
      $output .= "<li class=\"" . $styleClass . "\">" . $link . "\n";

	if (taxonomy_context_term_children($c)) {
        $output .= taxonomy_context_show_children($c, false) . "\n";
	}
	$nodes = taxonomy_context_show_nodes($c);
	if ($nodes) {
        $output .= "<ul>" . $nodes . "</ul>\n";
      }

      $output .= "</li>\n";
    }
  }
  if ($base) {
    $output .= taxonomy_context_show_nodes($tid);
  }
  $output .= "</ul>\n";
  return $output;
}

I added in a place to add styling to create Pop-out menus. The CSS needed for these menus to work is:

.menu li.drop-down ul { display: none; }
.menu li.drop-down:hover > ul { display: block; }
.menu li.drop-down:hover { list-style-image: url(menu-expanded.png); }

By adding the above CSS into the drupal.css (just for a temp way to make the menus work) and overwrite the taxonomy_context_show_children function with the PHP code above, I got the follow results.

Results:
A dynamic menu based on one of Drupal's taxonomy vocabularies will be outputted in full, all terms, nodes, child/sub terms, and child/sub nodes will be outputted as nested unordered lists. The nested lists will be hidden from view until their parent term is moused-over. If the user is currently on a node's page which is nested under terms the menu will stay expanded like how it does by default (this could be an option or changed). Also the output is valid XHTML in all taxonomy term and node configurations.

I would like to keep working on this a refining the code, add options, and make sure it works in all cases and all browsers (the current CSS won't work for IE, a script and other css rules will need to be implemented to make the pop-out menu work with IE).

Currently the only development I have done with Drupal is making some custom themes, but I would like to start developing modules too, and I am not sure how I start.