I think I may have found the solution.
All categories must be under the ‘Default Category’. This seems to be the root category that isn’t directly visible but everything that’s in it is.
To check this go to Cataloge > Manage Categories. Then drag everything under the Default Category and it should show up on the side nav.
To show the ‘products’ page you need to point a link to http://www.your-url.com/sales.html?___store=default
To do this I’d first disable the ‘Products’ button from the template. Got to:
/public_html/magento/app/design/frontend/default/f002/template/page/html and edit topmenu.phtml. You need to remove the line:
<li><a href="<?php echo $this->getUrl() ?>"><?php echo $this->__('Products') ?></a></li>
Next go to the Static Block called ‘Menu’ that you created when you installed the template and add the line:
Obviously you need to change ‘your-url’ to your own url. You can call it what you like, just change
Hope that helps