[kpayne]

Try this:

{section name=cat_num loop=$categories}
{ $categories[cat_num].category|escape }

      {if $cat eq $categories[cat_num].categoryid}
      {section name=subcat_num loop=$subcategories}
        { $subcategories[subcat_num].category|escape }

      {/section}
      {/if}
{/section}

You didn't have the index in the inner loop set correctly (cat_num vs. subcat_num). I also added "
" tags to make it display properly.

Hope this helps!

--Kurt