Hi Mike,
I agree we could use some better documentation for the menu options, just not sure how soon that will happen.
To make a vertical menu styled indented I would set UseTreeView=true and then just apply css, similar to what we have on the Site Map.
We have a lot of different menu configuration examples in the included skins, though I admit I can't think of one using treeview for the main menu, we used to have some like that and I think the jwv1 skin on this page uses a treeview and may be a good example for the menu but is not up to date for other aspects of the skin.
I don't recommend using multiple instances of SiteMenu and the one instance needs to have the id SiteMenu1, for additional menus add PageMenu1, PageMenu2, PageMenu3
None of the included skins have any problem highlighting correctly whether the home page is / , /Default.aspx, or /home.aspx as far as I know.
I suggest looking at skins we ship and find ones that have a menu structure similar to what you want including the presence of SiteMapData sources for each level when using multiple menus. The SiteMapDataSources have to have the correct ids on them as well that is expected by th emenu and the menu has to initialize the data for the sitemapdatasource, so if you are using mutliple menus you should make sure you use the same meun ids and sitemapdatsources as other skins that have the same number of menus.
When we get a chance we do have a to do item to add more documentation about menus.
Best,
Joe