If you want a quick fix, on line 171 it looks like
if ( $instance['category'] != "none" ) {
$category = '&cat='.$instance['category'];
} else {
if you ad in the $category_id = $instance['category']; line, to make it look like
if ( $instance['category'] != "none" ) {
$category_id = $instance['category'];
$category = '&cat='.$instance['category'];
} else {
and then on line 203
echo $before_title . '<a href="' . get_category_link($category) . '">'.$title.'</a>'.$after_title;
Changing $category to $category_id
echo $before_title . '<a href="' . get_category_link($category_id) . '">'.$title.'</a>'.$after_title;
Then save it and upload it and you'll be all set. This fix will be included into the next version which should be coming out beginning of december :)
Thanks!