First, I tried to find the original post/ forum that linked me to the answer to my quest, but I can't find it for the life of me... So, I'm posting here on a discussion that has already tried to answer the problem.
My problem was the same as the above people here, all suffering from lack of Category Indentation and want the quick fix. I tried in vain to get my category tag wp_list_cats to show the proper Parent/Child relationship in my side-bar for days, but only to stumble across a post that did fix the problem in foul swoop. I wish I could find that post again--it was good?
I figured that the problem was not in the use of the tag (wp_list_cats) nor the CSS I was using. I went through the ul, li, ul ul li, .... etc and messed with the "wp_list_cats ('sort_column =name& optioncount=1&..... etc.." but to no avail. Then I went to the root of my problem which seems to have been some broken code in Word-Press itself. And regrettably, I cannot say that it is broken or intentionally left out because I never really looked and compared the two files, however it did show Parent / Child sub-categories in the side-bar when I reapplied (or uploaded) the fixed-template-functions-category.php. It was miraculously fixed. I even went back to my theme folder and CSS and replaced them back to their original code, the Parent / Child indentation was still working!
So, Like the original post said: You want Parent / Child indentation on your categories, try this first: Upload this file into your /root/ wp-includes / directory and replace the old file called: template-functions-category.php... then you'll have indentation in your categories! This should also be in the Word Press Codex.... *hint* *hint*
Get the file: