It's most likely due to the margin code you have here:
.navigation ul li{
background:url(../images/nav-lnie.png) repeat-y right 0;
margin:0 2px 0 0;
}
Since there's a 2px margin on the right of each menu item, the left margin won't get hidden if you mouse over the next element. If the margin isn't really needed, you can remove it and it should work fine, given that there's enough space. If it's necessary, then on the hover command, you can change the spacing on the element:
.navigation ul li a:hover{
background:url(../images/hover.png) repeat-x;
margin-left: -2px;
padding-left: 2px;
}
Of course, it's a rough hack to fix the problem. Spacing can be adjusted on both ends as well.