The birefringence of an air-silica microstructure fiber has been studied by measurement of the fiber polarization mode dispersion (PMD) over the wavelength range 545-640 nm. The experimental results are shown to be in good agreement with vectorial numerical calculations, assuming an elliptical core with an eccentricity of 7%. We also report controlled experiments studying nonlinear vectorial modulation instability in the fiber, yielding 3.9-THz modulational instability sideband shifts that are in good agreement with theoretical predictions based on the calculated fiber dispersion and PMD characteristics.