Ok setting the top align to 0 worked perfectly! Thanks a hundred times.

My tpl_categories.css wasn't located in the directory you listed. I found mine in "includes/templates/CUSTOM/sideboxes/tpl_categories.css

I opened it up and it looks pretty close to what you have

Code:
if (SHOW_CATEGORIES_BOX_SPECIALS == 'true' or SHOW_CATEGORIES_BOX_PRODUCTS_ALL == 'true'){
    $content .= '';  // insert a blank line/box in the menu
    if (SHOW_CATEGORIES_BOX_SPECIALS == 'true') {

Does it need the "<p><p>" or do I need to move it to the other directory?

One last unrelated question. Can I add arrows only to the categories with sub categories? My version has no background images or references to images right now.