if this
<?php echo $row['prod_class']; ?>
is outside the while loop then at best it will only show the last prod_class from your query, at worst it's empty, which you don't check for.
Assuming you are pulling more than one record from the DB then you need to manipulate the data within the while loop.
Something like this
while($row = mysql_fetch_array( $result)) {
$menuItems.= 'li><a href="http://www.dynamicdrive.com/style/csslibrary/category/C1/">'.$row['prod_class'].'</a></li>';
}
Then echo out the $menuItems where it would fit in with the html code.