creating parent category and subcategory list in sidebar

Hi I am using code below in my sidebar.php to list posts from a category when on that category. It also lists posts from child category if there is one.

What I would like to do is add a current menu item class to the list items

I would also like to be able to indent the list items for child category posts

e.g

parent category post 1
parent category post 2
> indent child category post 1
> indent child category post 2
parent category post 3

<?php global $post;
$categories = get_the_category();
foreach ($categories as $category) :
?>
<h3 class="categories-menuheading">Menu</h3>
<?php endforeach; ?>
<ul id="kbo-category-menus">
<?php
$posts = get_posts('numberposts=20&category='. $category->term_id);
foreach($posts as $post) :
?>
<li><a href="<?php the_permalink(); ?>"><?php the_title(); ?></a></li>
<?php endforeach; ?>
</ul>