Hi,
Well, you need to specify the "top level product category" in that "category" option as I said.
If you specify a category without sub categories in it, then the filter won't find any category to display and won't display.
Regarding the creation of a product, we automatically set the current category you were in on the listing in the "category" option.
That's to avoid creating a product without category as otherwise you would loose it, since you wouldn't be able to access it, which would be even worst.
I would recommend to leave the "product category" in there and if you want another category, I would recommend to take the habit to first access the category where you want to create the product and then click on the "new" button. That way, you'll directly have the correct category in the product. Furthermore, when you click on "save & close" you'll see it directly on the listing of the products of that category.