Nested Categories not displaying – ?

Try this:

<?php wp_list_cats('hierarchical=true') ?>

instead of

<?php list_cats() ?>

If you’re not crazy about making the change yourself, mail me your theme (or tell me where I can download it) and I’ll make the change for you.

Check out my site to see it in action:

http://www.xyooj.com/blog

Add this to your stylesheet:
#nav ul ul {margin: 0;
padding-left: 7px;}
(change the value – 7 – to whatever you like)