Just installed v126.96.36.199 of wpTouch on a wordpress install (v3.4.1). The menu displays the tags and categories correctly, including the post count under each. I currently have two categories excluded (by id, separated by a comma) in the wpTouch settings. When the user navigates to the menu item (tag/category), wpTouch responds with a 404 (wordpress indicates no posts found). These are standard posts; not custom post objects. If I remove the excluded categories, then posts appear.
Any ideas/suggestions? I can dig in deeper into the code tomorrow, but thought someone might have some tips off the top of their head.