I don't have a navigation.php file with the theme i'm using but I believe that this is the code for my navbar:

<div id="foxmenucontainer">
<div id="foxmenu">
<ul>
<?php if (is_page()) { $highlight = "page_item"; } else {$highlight = "page_item current_page_item"; } ?>
<li class="<?php echo $highlight; ?>"><a href="<?php bloginfo('url'); ?>">Home</a></li>
<?php wp_list_pages('sort_column=menu_order&depth=1&title_li='); ?>
</ul>
</div>
</div>
<div class="content">

Check out this code..

=====<div id="foxmenucontainer">
<div id="foxmenu">
<ul>
<?php if (is_page()) { $highlight = "page_item"; } else {$highlight = "page_item current_page_item"; } ?>
<li class="<?php echo $highlight; ?>"><a href="<?php bloginfo('url'); ?>">Home</a></li>
<!-- / Put adsense code after this line-->
</ul>
</div>
</div>
<div class="content">

========

With this code, your horizontal adsense code will be displayed next to 'home' in navbar.. I removed all other links/pages (deleted this line <?php wp_list_pages('sort_column=menu_order&depth=1&title_li='); ?> ) including ABOUT page link. I believe 'About' is an page (Usually it is)

If you want to include ABOUT link as well, then add your adsense code after the wp_list_pages. But, it can get messier if your weblog is of shorter width and you have too many pages.

I hope you get it. If not, let me know. I am always here to help you.