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It has long since been considered that search engines can’t read JavaScript and the JavaScript is bad for SEO.Whilst JavaScript is not good for SEO on general it can now be read by search engines.
Robots with Browser Technology

Search Engine Spiders have previously used quite old hat browser technology. It was said that you could consider a search engine spider like a version 2 browser. This pretty much ment that search engine spiders were effectively basic text only browsers.

This is now not the case. It is repueted that Google updated its search engine spider with Mozilla browser technology. This means that search engines can read and understand some javascript, flash files and PDF files. This seems like a logical and natural progression for search engine spider technology.
What JavaScript can search engines read?

This is a good question! And its lucky that The SEO Files did a test on this. Read the JavaScript SEO Test results documented at SEO Chat.

The test determined the following points:

Search Engines can and do read JavaScript
The document.wrtie(“HTML in HERE”); method is read as normal HTML
The window.open method is followed and links are spidered
JavaScript is not a brick wall to search engines but it is not helpful for SEO purposes

So, what can we find about Javascript and SEO?

The SEO Files recomends that caution is still used when considering the use of JavaScript.

If you have to use JavaScript use document.write() for content and use the window.open() method for URLs in links rather than complex functions with multiple parameters.

If you are specifically using JavaScript to produce a dynamic menu you can get a very similar effect which is search engine friendly by using DHTML and CSS rather than heavy JavaScript code.