Well I’m actually surprised that isn’t causing your page to error out. If the plugin is disabled then that function shouldn’t be defined anymore. You could try commenting it out and just see if it will change anything, but at this point I just don’t know.
There has to be some variable that’s missing here. Something to do with your theme perhaps. As a last resort, could you try switching to a different theme (like WordPress’s default Twenty Eleven) and then creating a category template there? If you want to try that, you’ll need to paste your category.php template for that theme so I can make the necessary modifications.
At least then (if it works) we’ll know the issue was with the theme’s integration with the code and not necessarily the code itself.