Here's a FAQ: Why won't my nested list validate?
This one comes up surprisingly often in various Net fora.
If the W3C Validator gives you the following message:
Error: element "li" not allowed here; possible cause is an inline element containing a block-level element.
It's probably because the nested <ul> isn't contained within an <li>. Nested lists should be structured like this:
<ul>
<li>1</li>
<li>2
<ul>
<li>2.1</li>
<li>2.2</li>
</ul>
</li>
<li>3</li>
</ul>