[alphastara]

Okay here we go people, I've managed to get it to 3 levels of categories, I need more time to get it down more because my store has 5 levels in some areas I'll keep you posted.
Here is the code for /customer/categories.tpl

{capture name=menu}
{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}
{assign var=topmostcat value=$current_category.categoryid_path|regex_replace:"/\/.*/":""}
{if $cat eq $categories[cat_num].categoryid || $current_category.parentid eq $categories[cat_num].categoryid || $topmostcat 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 || $topmostcat 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 || $current_category.parentid eq $allcategories[subcat].categoryid}{/if}{$allcategories[subcat].category}{if $cat eq $allcategories[subcat].categoryid || $current_category.parentid eq $allcategories[subcat].categoryid}{/if}

{if $cat eq $allcategories[subcat].categoryid || $allcategories[$cat].parentid eq $allcategories[subcat].categoryid || $current_category.parentid eq $allcategories[subcat].categoryid}
{section name=subcat2 loop=$allcategories}
{if $allcategories[subcat2].parentid eq $allcategories[subcat].categoryid || $current_category.parentid eq $subcategories[subcat2].categoryid}
{if $cat eq $allcategories[subcat2].categoryid}{/if}{$allcategories[subcat2].category}{if $cat eq $allcategories[subcat2].categoryid}{/if}

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