I'm also having this problem. Above the lead article it says "no categories". I can't get it to note the correct category, but I can get rid of the problem by removing the following code from ui.tabs.php:
// this is where the name of the Lead Story category gets printed
And it seems like it's fine to remove that code, but I was afraid it was related to my next problem, which is that the lead article is duplicated on the front page: It appears in the lead article tab and then again in the rightcol under its category (and if I categorize it as a feature article, as well, it shows up yet a third time under featured articles).
It seems like I need a don't-duplicate command in there, but I'm not sure how to do that, especially since I'd have to reference what's showing up in the lead tab, not just earlier on the same page.
But this also seems like such a basic issue that everyone else must have resolved already.
I totally love this theme and am so grateful to its designer, but I'm a little confused about why there aren't more support forum discussions. I mean, a ton of people must be using this theme.
Maybe all the answers are in that $17 book and everyone else is quietly working on their sites, but that's just so weird. If I was going to pay for free stuff, I think I'd prefer to pay the designer of the theme!