I think this is doing what you want:
el = $('#topboxesmenu li:first-child');
setInterval(function() {
el = window.el;
el.siblings().children('a').css('background','#ff0000');
el.children('a').css('background-color', 'blue');
el = el.next().length ? el.next() : el.parent().children('li:first-child');
}, 1000);
See working demo
UPDATE:
Regarding your test page don't working, you have your javascript outside the body tag, try putting your </body>
tag just before the </html>
tag. You currently have this:
</body>
<script type="text/javascript" ....
...
...
</html>
UPDATE 2:
Also your jquery script tag :
<script type="text/javascript" src="http://code.jquery.com/jquery-1.7.1.js"></script>
should be placed inside the <head>
of your page, not the body where you currently have it.