That is because you are an administrator you can view all categories all the time.
You will also see a members photos category link when viewing the breadcrumb trail when viewing all your photos. http://www.petandpet.com/photopost/s...=500&ppuser=15
Like I said you can surpress the display on the category list on index and even remove upload permissions for it not to show for users on the upload box but you can not remove every single link in the program as that is a placeholder category can not be deleted at all.
If you log in as a regular user you will find it is not shown in your upload list.