I've noticed this problem, too, in different themes. In fact just yesterday I happened to be working on another theme and was trying to figure out why it was happening. But what I noticed is that it happens with many themes on my WindowsXP laptop (using Reactor Server Apache/PHP/MySQL). When I upload the same files to a Linux server, the dropdown is OK.
What is the OS of your server? I'm curious if it's also Windows.
About the cause, I don't know yet. Even if I specify a width for the dropdown list, it appears empty, so this may be a PHP issue rather than on the theme level.