[inebriate]

backup skin1/customer/categories.tpl and replace the inside with

{capture name=menu}

<form name="formCategories">

{if $active_modules.Fancy_Categories ne ""}
{include file="modules/Fancy_Categories/categories.tpl"}
{assign var="fc_cellpadding" value="0"}
{else}
{if $config.General.root_categories eq "Y"}

<select name="listCategories" onchange="window.location=this.options[selectedIndex].value">
<option value=""><font class="VertMenuItems">Select a Category</font></option>
{foreach from=$categories item=c}
<option value="home.php?cat={$c.categoryid}"><font class="VertMenuItems">{$c.category}</font></option>
{/foreach}
</select>

{else} {foreach from=$subcategories item=c key=catid}
<font class="CategoriesList"><a href="home.php?cat={$catid}" class="VertMenuItems">{$c.category}</a></font><br />
{/foreach}
{/if}
{/if}

</form>

{/capture}
{ include file="menu.tpl" dingbats="dingbats_categorie.gif" menu_title=$lng.lbl_categories menu_content=$smarty.capture.menu cellpadding=$fc_cellpadding}