Office Live Basics supports only two levels. You can add "1st level" pages under the "root" level. You can also add "2nd level" pages under "1st level" pages. But that is as far as you can go. You can't make the navigation hierarchy any deeper. If you have "Essentials", you can add more levels with FrontPage 2003, but if you are a "Basics" user, you are out of luck.
In other words, you can only have a menu heirarchy as in
Products
Hardware
But if you want to add pages under Hardware as in
Products
Hardware
Motherboards
Memory
you can't.
With just two levels, you can only build simplistic sites. Naturally, I am adding the issue to my wishlist.