The bookmarklet does actually work (despite what you must be thinking having found your way to this page), but it's slightly non-intuitive the first time you try it. You really do need to read the instructions on the post page properly if you haven't done so already. Specifically, you want to make sure you're choosing the bookmarklet when you're looking at the article you want to post to CiteULike, and not when you're looking at any other page
One common problem is that you aren't actually looking at the abstract or full text page of the paper you want to add. For instance, PubMed sometimes pulls up search results in a big long list. You can't, for instance, just check the ones you want and hit the bookmarklet. And you can't just submit a page which shows a table of contents for a journal and hope that the system will figure out which one you want. It just won't. It's really not that clever.
So, in summary, follow the instructions. Go and find an article that you're interested in, and then choose the bookmarklet from the bookmark menu when you're looking at it. If you're doing that, and promise that you've read the instructions carefully, then you may have discovered a bug. I'd be really interested to hear from you at camster@citeulike.org if you think you've got one.