[Thedae2k]

well the first question can be resolved by using the fancy categories mod by x-cart. There are 3 settings for types of category trees and one will do just what your looking for.

The second needs a little more explanation. Do you have a image of what your trying to do?

You can choose in the General settings/Appearance section

"Display products list in multiple columns (1-3) (leave empty to use standard format):"

here you can choose and the next option which is;

"Display only featured products list in multicolumn format:"

You can also add images to any category or sub-category.