How to show views block output in drupal menu?
If you are trying to build a dropdown menu, you can have a look at Nice Menus. This module provides blocks that automatically generates dropdown menus from a selected menu.

If you want to build something more particular than a basic dropdown menu based on Drupal menu system, you should add your block to a hidden region in your html and then move it in the DOM with jquery.

You can do something like that:

// Get menu item
menu = jQuery('#selector .to li');

// Get block
block = jQuery('#block-block-myblock');

// Force hide
block.hide();

// Append the block to the menu item
block.appendTo(menu);

// Show / hide menu on hover
menu.hover(function(){ // Function to be run on mouse hover
  block.fadeIn();
}, function(){ // Function to be run on mouse out
  block.fadeOut();
});


Hope this will help you !
Cheers