Try removing the inlinedisplay from <li>and use instead float:left.
Try: http://jsfiddle.net/RGvjj/1/
#navigation li {
font-size: 20px;
margin-left: 10px;
padding-left: 10px;
border-left: 3px solid #1161A5;
color: #ffffdd;
text-decoration: none;
float:left;
}
EDIT: , , , , jQuery display block. , block (<a>) inline (<li>), .
float:left, <li> block , <a> block.