I had a similar problem. I could only add so many menu items. I contacted my hosting provider and told them most of what I read on this forum. (They spent QUITE a WHILE with me! love, love, love Rackspace!)
As it turns out, by process of elimination Google XML Sitemaps version3.2.4 seems to be the culprit. I deactivated it while configuring my menu, re-activated it right after and: VOILA!
Worked for me, hope it helps someone else!