Arranging Post Order in Category

You can’t sort posts by category. You can retrieve the categories in alpha order, then for each category, retrieve that category’s posts and display them.

<?php
$categories=get_categories('orderby=name&amp;order=ASC');
  foreach($categories as $category) {
      $posts=get_posts('showposts=-1&amp;cat='. $category->term_id);
      if ($posts) {
        echo '<p>Category: <a href="' . get_category_link( $category->term_id ) . '" title="' . sprintf( __( "View all posts in %s" ), $category->name ) . '" ' . '>' . $category->name.'</a> </p> ';
        foreach($posts as $post) {
          setup_postdata($post); ?>
          <p><a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title_attribute(); ?>"><?php the_title(); ?></a></p>
          <?php
        } // foreach($posts
      } // if ($posts
    } // foreach($categories
?>