Creating and editing categories for pages is a stepwise process that has to been done in order or it will not display your content correctly.

Setting up your taxonomy:

This is where your category lists are setup and stored. Follow the following path:

Administer>Content Management> Taxonomy

Add Vocabulary Tab

This is where you will go to create your list. Fill out the name of the list and the Machine name (I use the same for all). Make sure that you check off what content types that you want to be included for you list. Once you have created this, you can go back to the lists tab to edit and view them.

Edit Vocab= Changes to the setup the vocab list, such as content type and name of the list.

List Terms= This is so that you can view the terms that are included to see if they include terms that you need.

Add terms= Lets you add more terms to your list of vocabulary.

Implementing Taxonomy Created as Categories:

To enable the categories that you just created go to the following path:

Administer> Site Configuration> Choose page type from the left

Once you have selected to group that you want to apply your categories to you can edit the options under the categories tab.

For example: Under FAQ there is a Categories tab where you can choose how you want the categories displayed (as a drop down menu or an inline list).

You may have to play around with these options to get it to look how you want. What I recommend doing is having the affected page open in one browser tab and the Admin site open in another. After making changes and hitting save, you can switch over to the affected page and hit "refresh" to see how the page is displayed.

Taxonomy upgrade extras: 
Drupal