Solution 1:

I don't think there is a built-in function in PHP that does this.

I tried the following code, and it seems to work to prepare the nested array the way you describe:

$nodes = array();
$tree = array();
foreach ($source as &$node) {
  $node["Children"] = array();
  $id = $node["Menu"]["id"];
  $parent_id = $node["Menu"]["parent_id"];
  $nodes[$id] =& $node;
  if (array_key_exists($parent_id, $nodes)) {
    $nodes[$parent_id]["Children"][] =& $node;
  } else {
    $tree[] =& $node;
  }
}

var_dump($tree);

I wrote a similar algorithm in a PHP class I wrote for my presentation Hierarchical Models in SQL and PHP, but I was using objects instead of plain arrays.