Moodle 1.9 updated to YUI 2.6. However, it seems like they accidentally misplaced one of their sprite files in YUI 2.6, so the treeview menu doesn't display right. I don't quite know what happened with the file, since they don't have their VCS publicly available all I know is that it was there in 2.5.2 and not in 2.6.
This is affecting the contrib block yui_menu and may affect any thing else that uses treeview. I submitted a bug report a while back (http://sourceforge.net/tracker2/?func=detail&aid=2173222&group_id=165715&atid=836476) but it has not yet been fixed.