Yes this still happens, and I think I know why.
http://hr3rdgen.org/gallery/browseim...?c=22&userid=1
When I've set a category to act as a members category it uploads photos under my user name.
However, when I go into my stuff and add a category, I the only category I have set to allow me to add a category to is "Member Gallery" not my user name that it created it under.
Thus it creates a new category, and at the same time, shows it as a sub category under my username.
I think .... ??
I'm not sure. Am I on to something here?