There could be "residual" data in the database - could be caused by products that were ORIGINALLY in with the categories, having been ordered by customers. The database's order tables will now probably refer to those products and their old "categories".
I am not absolutely sure on the above - the only way to check is to look at the database via phpMyAdmin.
But try "Optimizing" your database by going to admin >>> tools >>> store manager, then (at the bottom) click the optimize button.
Thanks schoolboy - I was just shooting blanks hoping there would be an easy fix.....since I have never seen this before I thought there might be something I was overlooking...I did try the optimize feature but no luck....and unfortunately I cannot get to the database so this is not going to be good....
1) put the products back where they were (let's say the category was widgets)
2) rename the category to oldwidgets and disable it (click on the green icon to turn it red)
3) create a new widgets category
4) create the needed subcategories under the new widgets category
5) link the products from oldwidgets to the new subcategories.
For step 5, you can also duplicate them in the new subcategories and disable them in the old category. Either way, you'll retain the products for historical purposes.
Try it with one first an see if it works.
I had a similar problem (my own fault), but I was able to temporarily move the products to another category (as you did) and successfully created the subcategory under the original category. Are you sure the category is empty?
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