Your HTML should include quotes for attributes : http://jsfiddle.net/dKWnb/4/
Not required when using a HTML5 doctype - thanks @bazmegakapa
You create the array each time and add a value to it ... its working as expected ?
Moving the array outside of the live() function works fine :
var myarray = []; // more efficient than new Array()
$("#test").live("click",function() {
myarray.push($("#drop").val());
alert(myarray);
});
Also note that in later versions of jQuery v1.7 -> the live() method is deprecated and replaced by the on() method.