Hello ..
I did manage to get it working (with some help from the guys @ XCart Support)
This is how it's done:
Modify the "<xcart-dir>/include/categories.php" file:
1) find the following line (it is 290th in X-Cart v4.1.0 by default)
if (($current_area == "C" && defined("GET_ALL_CATEGORIES")) || defined('MANAGE_CATEGORIES')) {
2) replace it with the next one
if (($current_area == "C") || defined('MANAGE_CATEGORIES')) {
Then edit categories.tpl replace with the following code after {if $config.General.root_categories eq "Y"}
{foreach from=$categories item=c}
<font class="CategoriesList">
{$c.category}</font>
<ul>
{foreach from=$allcategories item=cat}
{if $cat.parentid eq $c.categoryid}[*]<font class="CategoriesList">
{$cat.category}</font>
{/if}
{/foreach}[/list]{/foreach}
Hope this helps ...
Regards
Shafiq :sK