Vertical site navigation to SharePoint 2010?

You can create the navigation that you want by determining in advance the hierarchy that you want for the Web sites and pages you are creating. You can either fine-tune the hierarchy by using the Navigation Settings page available through the Site Actions menu or you can use the Site Settings page in SharePoint Server 2010.
Go to:Site Settings>Quick Launch and Enable Tree view
Go to:Site Settings>Navigation to modify/edit your site navigation.

To go to Site Settings:
On the Home page, click on SITE ACTIONS>SITE SETTINGS>MODIFY ALL SITE SETTINGS

Thanks, but Treeview causes problems. I needs to excelude all libraries, workflow tasks. etc.
I would like to see only subsites. Nothing else. How do I do this?

you want a view for users with lesser permissions to not see libraries,work flow tasks etc?

You can do that by editing the master page using spd.

It is not permission issue. Please see image I attached in the original post. It is requirement that navigation look like in the image because of usability and graphical design guidelines.

Would I be correct in assuming that you already edited the master page to get the look you provided in the picture?  

If so, follow the path Norman suggested Site Settings > Navigation.  From there you will be able to show, hide and create site headings.