Sub Menu Item and Category Listing Issue

Hi Guys,

We are ticking along and adding some new products, so I thought I'd get fancy with some submenu items. Some of the products belong to multiple categories, but I see that doesn't really seem to be an issue.

1) I have created the new categories, added my products, added them to appropriate categories.. nested the menu items and whammo.. I see the categories on top of the products in the content area (also see them real nice in the menu area).. So, I unpublish them in the menu.. STILL see a big box of vertical listing of the categories in the content area. So strange. I had to turn them off (unpublish) in the actual category area and I'll await your advice.

2) Here is what I'd like to do if this helps:

Menu Item like this

Shop (which in content area will display all products, kind of a summary page) I've given it a Category Listing
Paper (under shop) which has all paper items
Christmas (under Paper) has all Christmas paper
Party (under Paper) has all Party Paper
Ribbon (under shop) which just has the ribbon.

At the moment, I have created them ALL with Category Listing (102) I notice when I had the error that it these categories DO show the proper products as per their category but it just looks crazy because it has a big box above the products with the category name??! for example 3 boxes that say Paper, Christmas, Party, Ribbon all above each other (vertically displayed) BEFORE the products.

Thanks so much for your thoughts. I can send a screen shot if my verbosity is not clear.
Susan