When there are many notifications, browser creates vertical scrollbar within notifications list. Notification items have fixed width, which is enough to display without scrollbars, but forces content out of its boundaries when there is vertical scrollbar.

Solution: remove fixed width and float from #notification_list ul li
Nether fixed width nor float are needed.

Another problem is notifications list is incorrectly positioned in IE7. To fix it, positioning of whole popup should be fixed to be relative to link and ancient linklist clearing should be changed to modern method.