The first problem with excluding categories is that if a post is in two categories, the exclude will not work unless both categories are excluded. I would suggest that this is not intuitive, and is not the behavior of query_posts() which has a similar feature to exclude categories.
The second problem is that the SQL generated by the plug-in is not sophisticated enough to distinguish category terms from other terms in the taxonomy tables. As a result, there is a conflict with the co-authors-plus plug in, which uses the taxonomy tables to store co-authors. The result is if a post has co-authors, it will always appear in the archives even if it's in a single category that has been excluded.
My question at this point is does anybody have a fix for this? I like this plug-in a lot, so I'm going to try to improve it, but given my SQL skill level, it's going to take some time, and I'd just as soon not re-invent a wheel.
Thank you. My apologies to the author if my analysis is defective.