1.5.9 doesn't work for me with ColorfulTabs either. I have the latest ColorfulTabs version, 188.8.131.52.1. I disabled ColorfulTabs and Stay-Open Menu works fine. I'll trade pretty tabs for the beautiful function of this add-on any day.
I cannot reproduce this issue in a clean profile with only Stay-Open Menu 1.5.9 and ColorfulTabs 184.108.40.206.1 installed. (I did see it with ColorfulTabs 220.127.116.11) Possibly some third extension is also involved in the conflict? If you'd like help sorting out the cause, feel free to contact me via http://www.shadetreeapiary.com/extension/Forms/contactform.htm or post to http://forums.mozillazine.org/viewtopic.php?f=48&t=633732