Magento 1 – How to Hide Admin Menu if Custom Module is Disabled

As mentioned in comments to OP question, this is a duplicate of Possible to hide admin menu if custom module is disabled?

but placed as answer to respond to OP's comments.

You will place the <depends> in the menu item configuration, as such:

(code example taken from ecomdev's post mentioned in the noted duplicate answer)

     <menu>
        <mycustom_menu translate="title" module="[module_name]">
            <!-- this depends will hide the entire menu option -->
            <depends>
              <config>payment/checkmo/active</config>
            </depends>
            <title>My Custom Menu Item</title>
            <sort_order>300</sort_order>
            <children>
                <!-- child items go here -->
                <subitem translate="title" module="[module_name]">
                    <!-- this depends will hide the sub menu option -->
                    <depends>
                       <module>payment/checkmo/active</module>
                    </depends>
                    <title>Subitem</title>
                    <sort_order>10</sort_order>
                    <action>adminhtml/mycustom_controller/</action>
                </subitem>
            </children>
        </mycustom_menu>
    </menu>

Your code appears to be one level too far up in the xml it should look as follows:

<config>
    <menu>
        <menu-type> <!-- e.g. <catalog> -->
            <depends>
                <config>payment/checkmo/active</config>
            </depends>
        </menu-type>
    </menu>
<config>

Note the missing menu-type node from your original code snippet.

If you look into the database table core_config_data for the path you will see that the entry is set to 1 when the module is disabled from the advanced tab. This means that the code that normally works for the menu will sadly not work for disabling modules via the admin config section and will in fact disable the menu item when the module is active.

The best suggestion would be to do the disable on the main module active flag and then change the module to active/inactive via the xml file under app/etc/modules. The following will remove the menu item when Example_Module is disabled.

<depends>
    <module>Example_Module</module>
</depends>