This is not a comprehensive example (I didn’t write out an example of editing the navigation myself … yet) – but I will point out where the files are that you need to edit the top and left navigation.
First off, the template files.
The files that have the HTML are located here:
Left.phtml controls the left hand navigation, if you set your categories to be an anchor to get the left hand navigation to be used.
Now the file that pulls the categories (and has some functionality to create some of the HTML) is here:
You should review this to see the various functions and see what they do.
The functions “drawItem” and “drawOpenCategoryItem” should be of particular interest, since they create some HTML to output.
Hope this helps someone get started creating a custom navigation!