First widgets were disappearing now categories built into the theme are gone!

Haylp!

My site: littleIndiana.com

So, little Indiana was having widget issues. They kept disappearing! They haven’t come back so I’ve added new “temporary” widgets for now. I’ve lost what I had before. 🙁

I upgraded my WP from 2.8.3 to the latest and greatest hoping it would fix the problem. So far — my widgets are sticking but now if you look along the middle column, where the first post is “Klein Brot Haus” you will notice that there is no category at the top of it — in fact, each of the images that line the middle column are all supposed to have “town” categories above the tops of them: Brookston, DeMotte, Delphi,etc. etc.

I am at a loss for what to do. I am still using the freebie version of Branford Magazine. I plan on upgrading to the pay version but I am in the midst of having a new site redesigned and I just can’t do it all! 🙂

I’d appreciate any help. I have no idea where to begin. I looked in my theme files and everything is there — it’s just not showing up.

PS I am not an html wizard — my knowledge is pretty basic. 😉

Thank you, thank you.
Jessica