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Following the tip that my colleague Mauro Cardarelli posted in his blog, I still wasn’t seeing any flyouts on the navigation tabs. I fiddled with things for a while and finally figured out why. I needed to change a single navigation option to make things work.
Say you have a site hierarchy like:
| Offices |
| New York
| San Francisco
Once you’ve set the MaximumDynamicDisplayLevels property to 2 in your master page, you also need to go to the Offices site and do Site Actions/Site Settings/Navigation and check the Show Subsites checkbox. Go back to your Home Page, and there are the flyouts!