Here's what happens:
If sh404sef is enabled, the mobile version menu items work however modules that only get displayed on the desktop version are visible. When I disable it, it works properly. I think what happens is that sh404sef remembers the desktop version but I have no idea how to fix this. any thoughts?

My settings are Joomla 1.5.18, sh404sef 2.1.8.777, mobile joomla latest RC.
Mobile Joomla Plugin order is -99, sh404 is 10, live_site has been commented.

I tested MJ with sh404sef 2.1.2.651 and 2.2.1.932 (the only versions that I have), and there was no such an issue.

Try to exchange orders of MJ plugin and sh404sef plugin, maybe it helps. Or upgrade sh404sef extension.