Hi @illusionandcards - thanks for the report! It looks like this error is related to a fairly new feature, which is controlled by the ‘default subcategory on read only category’ site setting which you’ve enabled.
We’re digging into the problem and will make a fix, but in the meantime I think you’ll be able to get things working by turning that setting off. Can you give it a try and let us know if it works?