The reason no products show up in the category is because you didn't add the products specifically to the category. You only added them to the subcategory. To add a product to more than one category, you would want to hold control or command depending on your operating system while selecting the different categories. The reason it is done this way is so that you have more control over the products that get shown in a category.
If you're accessing the categories or sub categories from the top menu, a search is being done, so the side menu will not be open when you access the categories or subcategories. If you access them from the side menu, the subcategories will slide open.
It looks like someone is already taking a look at your Theme-it issue and will get back to you as soon as possible on that.
