The site in question is http://shopbluehorse.com

If you click on Shop By Category - then Home Goods it pulls the subcategories from Shop By Recipient and NOT what is in the admin (which are 2 subcategories called Glassware and Kitchenware)....

It seems any subcategory that has additional categories under it has this issue (Home Goods, Holidays) - subcategories that open to products are fine...

What am I missing here?!?!?!?

Thank you for any help!