In a brand new installation of WP Catalog, I have added two categories (Media and Publications) and one product (a DVD in the Media category). On the product details page for the DVD below the menu bar (2011 theme) is the string: All Products >> Media >> [name of DVD]. When I click the word "Media" in that line, I get a 404. The link is trying to access http://aguilateam.com/wpccategories/media which doesn't exist.
I'm using the Default Permalink settings. I tried changing it to Post Name, saved the changes, set it back, saved the changes. Did not fix it.