Let me see the code that TestComplete generates for clicking the menu items. Most probably, the problem is that the index of the pop-up menu changes from 1 to 2 when the submenu is opened, and TC fails to get the correct object.
BTW, Submenus are opened automatically when the mouse pointer is hovered over a menu item containing a submenu. TestComplete does not record mouse movements. So, you need to click the menu item containing the submenu during the recording.