the categories.php file contains some errors :
</ul> without
  • , without . so

    1. erase line 100
    $categories_string .= '
';

2. if you want effect change line 53
if ($level{$categories['categories_id']} == 1) { $categories_string .= '
'; }

to
if ($level{$categories['categories_id']} == 1) { $categories_string .= '
'; }

OR, if you don't want effect, juste erase this line 53 AND the line 59
if ($level{$categories['categories_id']} == 1) { $categories_string .= ''; }

3. change
to
(twice).

note: the included file is the original one.

More...