What is happening here is that when I choose the category I want the files to download, all the files are created in the root of my category folder even though I have the options to create subfolders. Here's how to reproduce it as pictures won't help in this situation.
Steps to reproduce:
1. Got to settings and under Download section, check box both "create subfolder based on NZB/root node name" and "Create subfolders based on group name" options
2. Import or add a nzb to download
3. right click on nzb you just imported and choose your category to download to
Your files will be in the root of your category folders and NO folders are created based on your options you chose in step 1.
If you repeat the same steps above but in steps 3, choose download to a different location then your sub folders will be created with the options in step 1