The theme phpkaox is not part of Xoops core more.
In earlier versions of Xoops core, there was some theme definitions in xoopsroot/ xoops.css
They are removed, so you should include them in your themes CSS file
The missing lines are
#mainmenu a {text-align:left; display: block; margin: 0; padding: 4px;}
#mainmenu a.menuTop {padding-left: 3px;}
#mainmenu a.menuMain {padding-left: 3px;}
#mainmenu a.menuSub {padding-left: 9px;}
#usermenu a {text-align:left; display: block; margin: 0; padding: 4px;}
#usermenu a.menuTop {}
#usermenu a.highlight {color: #0000ff; background-color: #fcc;}
The linebreak in the menu is created by
display: block;