jQuery disable a link

$('#myLink').click(function(e) {
    e.preventDefault();
    //do other stuff when a click happens
});

That will prevent the default behaviour of a hyperlink, which is to visit the specified href.

From the jQuery tutorial:

For click and most other events, you
can prevent the default behaviour –
here, following the link to jquery.com
– by calling event.preventDefault() in the event handler

If you want to preventDefault() only if a certain condition is fulfilled (something is hidden for instance), you could test the visibility of your ul with the class expanded. If it is visible (i.e. not hidden) the link should fire as normal, as the if statement will not be entered, and thus the default behaviour will not be prevented:

$('ul li').click(function(e) {
    if($('ul.expanded').is(':hidden')) {
        e.preventDefault();
        $('ul').addClass('expanded');
        $('ul.expanded').fadeIn(300);
    } 
});