Brian

It's because you have the 'Category is Open for Images' option set to 'No' for that category, so that option is preventing the category from being displayed there. Since that category has the 'Act as Category' option set to 'No' you are not going to be able to upload to it anyways, so if you change the 'Category is Open for Images' option to 'Yes' then that should take care of the problem.