Depending on exactly what you mean by "submenus", I would think it's your code:

      <Setting>
        <Name>ExpandDepth</Name>
        <Value>1</Value>
      </Setting>

This should show one menu depth below your root.  If you're seeing that but no more, you need to increase the depth.  If you're not seeing a level below root, in otherwords not even seeing the depth of 1, then I can't explain it.

Remember you'll need to reupload this after the change and reparse the skin for it to be incorporated into the ASCX skin file that DNN uses.  Otherwise DNN uses the ASCX file that was there before, it doesn't parse the files until you tell it to.

Jeff