Ok so I found this discussed many times before. One person said to do this:
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As to IE7's Menu Bar, based on my test, if you have configured the following restriction, the tab feature of IE7 will be disabled and IE will be restored to classic(IE6) mode. Under this mode, IE's menu bar cannot be hid.
[Windows Restrictions\General Restrictions\Prevent access to Windows Explorer features: Folder Options, Customize Toolbar, and the My Documents folder]
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Only problem is, yes now I see the menu bar option when I right-click on the toolbar. But when I choose it, nothing happens. It stays unchecked! I don't see the menu toolbar anywhere. Any ideas?