1.Login to your blogger dashboard--> layout- -> Edit HTML

2.Scroll down to where you see </head> tag .

3.Copy below code and paste it just before the </head> tag.

<style type='text/css'>
#menu1 {
       width: 200px;
       margin: 10px;
       border-style: solid solid none solid;
       border-color: #3D261D;
       border-size: 1px;
       border-width: 1px;
       }

#menu1 ul {
       list-style: none;
       margin: 0;
       padding: 0;
       }

#menu1 img {
   border: none;
}

#menu1 li a {
       height: 32px;
         voice-family: &quot;\&quot;}\&quot;&quot;;
         voice-family: inherit;
         height: 24px;
       text-decoration: none;
       }

#menu1 li a:link, #menu1 li a:visited {
       color: #E4D6CD;
       display: block;
       background:  url(http://3.bp.blogspot.com/_4HKUHirY_2U/Sw8v0o9zrKI/AAAAAAAAAV8/m7xBrWjtnOQ/menu1.gif);
       padding: 8px 0 0 10px;
       }

#menu1 li a:hover, #menu1 li #current {
       color: #FFF;
       background:  url(http://3.bp.blogspot.com/_4HKUHirY_2U/Sw8v0o9zrKI/AAAAAAAAAV8/m7xBrWjtnOQ/menu1.gif) 0 -32px;
       padding: 8px 0 0 10px;
       }
</style>

Note :Please Host menu1.gif yourself.

4.Now save your template.

5.Go to Layout-->Page Elements and click on "Add a gadget".

6.Select "html/java script" and add the code given below and click save.

<div id="menu1">

<ul>
                              
<li><a href="#">Home</a></li>

<li><a href="#">HTML</a></li>

<li><a href="#">CSS</a></li>

<li><a href="#">Java Script</a></li>

<li><a href="#">Templates</a></li>

<li><a href="#">About</a></li>

<li><a href="#">Contact</a></li>

</ul>
              
</div>

You are done.

Demo