Highlight specific Posts in a menu when viewing a category page

I am trying to create a site that has 2 menus that highlight depending on the page you are on. Menu 1 is a list of all posts (being studio work) and menu 2 is a list of categories that the work falls into. I have it working so that when you are on a post the categories it is listed under highlight. For this I used http://kahi.cz/wordpress/highlight-used-categories-plugin/

Now I am trying to get it to work the other way, so that if i click on a category, all the posts that relate to that category highlight as well, not just show up in the main content area. Check out my WIP below to see what I mean.

http://wattsweb.com.au/