That's because the 100% height is 100% of the VIEWPORT so when you shrink the viewport, so does the div.
Probably your biggest problem is that EVERYTHING is absolutely positioned. This is not necessary and causes many problems of it's own. It would be better to use the normal document flow and floats to acheive your desired layout.
Float your #menu left, add a left-margin wide enough to clear the left menu to push the content area over. There's no need to absolutely position the header, it will sit at the top anyway, just use margin and padding to put it where you want it.
Rather than wrangling with the 100% height problems, it is probably easier to use the 'faux column' method to make columns appear to be the same height:
Any Column Longest - css-discuss
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