I've tested the appearance of the Menu with the same CSS imported. On my side, when a menu item is hovered the style is applied correctly:
Since I lack details about the application and the Menu component declaration, what I can recommend you is to double-check for any imported CSS files that may affect the appearance of the component. Also, check if the version of the Telerik UI for Blazor matches the version of the theme file.
Please, make the needed checks at your end and let me know the results. In case you are still unable to find the reason for the problem, may I ask you to prepare an example in which the issue is reproducible so I can review it?