Convert list

Ive been trying to figure out a way to convert a list into some divs, the final idea is to make my own Menu plugin, mainly out of interest.

I did open a question which worked well Q_27988943 however after changing the code so I could work with it, it seems to have broken, and I cannot figure out why.

I have restarted a few times, and as soon as I try anything it breaks.

I've put my code in a simplified form as a jsfiddle http://jsfiddle.net/eptCx/

My main issue is, is when I run it through a debugger, it doesn't even try and do the first each statement at all, but does run the alert fine, but shows it still as a list.

Any ideas what Im doing wrong?

Thanks in advance