Cannot delete category

I have just installed WP 2.0.3 and am setting up my first blog. Using K2 as the theme. All seems to be working fine but I’m having problems deleting a category I created. When I use the WP control panel and go to Manage>Categories then select Delete for the category I want to delete I get a message that I do not have permission to do that. I’m logged in with administrator rights and I can seem to delete Posts or Comments, just not categories. I have installe and activated WordPress 2.0.3 Tuneup with no resolution. Also would like to know how to make the categories visible in the sidebar. Any help appreciated.