Chuck, I've done some testing with a fresh install (photopost & phpbb3) and I still can't get category permissions to work properly. Photopost v.8.22 seems to only apply category permissions to a particular usergroup if that usergroup is set as the user's "default" usergroup which is a phpbb3 setting (['group_id']).
I'm no programmer, but I have found a code difference in Photopost's integration file (phpbb3.php) between v.8.22 and v.7.1 when it comes to that ['group_id'] variable. Not sure if that's creating my problem or not, but I do know that I can replace the newer phpbb3.php file (v.8.22) with the older one (v.7.1) and get permissions to work the way that I need them to work. I just don't know if I'm creating other problems by using the older phpbb3.php file.
Could you please verify whether or not the latest integration file is working properly and if you say it is, can I just use the older or is it creating problems somewhere else?