[JWait]

The 4.1.x site would probably be easier to work with. Also, it is possible any mods you have will not work with 4.2.

Anyway, what happens when you do one step at a time?

Make the changes in the skin1.css stylesheet (and skin1_admin.css).
Then change the dialog.tpl and test it, both as a customer and admin, using as many web browsers as you have (be sure to clear the templates cache before checking).

When you are satisfied it works change to the new menu.tpl and test it again (be sure to clear the templates cache before checking).

Finally, check your "on Sale" mod and see if it works properly. If it does not have rounded corners check that it is using either menu.tpl or dialog.tpl depending on where it is located.