Here are some answers.

I found this on the Autodesk Discussion Board. It relates tou your question specifically.
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Reply From: CadMonster
Date: Jan/05/06 - 12:53 (CST) NEW!
Reply
Re: Custom Flyouts In AutoCAD 2006??
Make sure you install the first update before you start doing custom toolbars. I ran into problems with my toolbars and then a installed the first service pack and all was fine.
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Reply From: R. Robert Bell
Date: Jan/05/06 - 13:38 (CST) NEW!
Reply
Re: Custom Flyouts In AutoCAD 2006??
Once you are running the service pack, there are two approaches.
If the source toolbar already exists, and you just want it to be a flyout in
another toolbar, you need to expand the target toolbar, and simply
drag-n-drop the source toolbar somewhere in the middle of the target
toolbar. Drag-n-drop to change the flyout's position after it is created.
If the source toolbar doesn't exist yet, expand the target toolbar.
Right-click and select New Flyout. The flyout is created, and it's source
toolbar is automatically created.
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