1) for the default file, you have bound to the image column from the recordset, you need to bind the default file to the file hidden form element
2) In the update record behavior, you have bound to the newFile element from the form collection, you need to use the Uploaded Files (imageNew) -> Server File Name.
3) To troubleshoot why the image is not uploading, add the following code at line 1:
change the following line:
$WA_redirectURL = "categories_Results.php";
$WA_redirectURL = "";
and add the following code just after the <body> tag:
<?php if($_SERVER['REEQUEST_METHOD'] == "POST") echo(WA_DFP_AllUploadsDebug()); ?>