I think I figured it out, had to add one more selector to this (.sf- menu li.sfHover a)
.sf-menu li:hover, .sf-menu li.sfHover, .sf-menu li.sfHover a, .sf-menu a:focus, .sf-menu a:hover, .sf-menu a:active { background-color:#f26921; background-image:url(images/logo_tiny2.gif); }