You could create you SubCategory at the Top level then move it into the Category you want it in and then Move the Product(s) into your new SubCategory ...

NOTE: this is a work around just to allow you to get your SubCategory into the Top level Category that you want it in and get the Product(s) out of that Category and into SubCategories ...

Do NOT leave Products and Categories in a Category as Categories are meant to hold Categories or Products and never both at the same time ...