Ok for starters in subcategories.tpl
replace
Code:
{capture name=dialog}
{assign var="tmp" value="0"}
with
Code:
{capture name=dialog}
{assign var="tmp" value="0"}
{section name=cat_num loop=$subcategories}
{if $subcategories[cat_num].category}{assign var="tmp" value="1"}{/if}
{/section}
Right above the start of the Mod. This will lose the extra text saying that there are no products.
I'm working on the other issue.