You might try something like this in common_files/customer/categories.tpl...
Code:
{foreach from=$categories_menu_list item=c name=categories}
{if $categories[cat_num].categoryid neq XXX}
<li{interline name=categories}><a href="home.php?cat={$c.categoryid}" title="{$c.category|escape}">{$c.category|amp}</a></li>
{/if}
{/foreach}
You should be able to get the cat_num and cat id from the "Categories" section in admin.
There are 3rd party mods that will hide categories.
Check this thread for a possible solution....
http://forum.x-cart.com/showthread.php?t=44414
You might check this thread for a different solution...
http://forum.x-cart.com/showthread.php?t=52493&page=2