The categories mod you are using does strange things to the links. The subcategories generate links as if they were top cats, but if you click on a top cat, you get a proper listing of its subcats in the center, and those have the correct cPaths.

For the top categories, do you want them indented at all, or lined up at the left like the subcats? The reason they are indented on the first line is padding applied in the stylesheet; the indent doesn't carry over to the second line because the <a> element is "inline" by default. If you want it to have "block" characteristics, you need to make it display: block;