Hello,
A few days ago there is a nick name Jess has giving me an idea how to create menus. I gave credit to Jess.
I am currently using WordPress version 3.5.1. As much as I can, in your case you don’t need plugin for creating category and/or subcategory. I think you have not select a check box or the category name to make it appears as parent category. You need to look again in the category menu.
It works!
You are awesome Jess.
Thank you.