[balinor]

Try this:

[img]{$ImagesDir}/catheading.jpg[/img]
<div class="VertMenuBox">
{if $active_modules.Fancy_Categories ne ""}
{include file="`$fancycategories_config.modules_path`/fancy_categories.tpl"}
{else}
{if $config.General.root_categories eq "Y"}
{section name=cat_num loop=$categories}
{if $cat eq $categories[cat_num].categoryid || $current_category.parentid eq $categories[cat_num].categoryid}
{$categories[cat_num].category}

{else}
{$categories[cat_num].category}<HR size="1" noshade class="CateMenuHr">
{/if}
{if $cat eq $categories[cat_num].categoryid || $current_category.parentid eq $categories[cat_num].categoryid}
{section name=subcat loop=$allcategories}
{if $allcategories[subcat].parentid eq $categories[cat_num].categoryid}{if $cat eq $allcategories[subcat].categoryid}{/if}{$allcategories[subcat].category}{if $cat eq $allcategories[subcat].categoryid}{/if}

{/if}
{/section}
<HR size="1" noshade class="CateMenuHr">
{/if}
{/section}
{else}
{section name=cat_num loop=$subcategories}
<FONT class="CategoriesList">{$subcategories[cat_num].category}</FONT>

{/section}
{/if}
{/if}
</div>