I was beating myself senseless trying to fix this problem. we have 3 or 4 blogs with the same plugins and theme, and only one of them had this problem. categories and posts both redirected back to the front page and said Nothing found for [Page Title].
After reading kellye’s post I tried renaming the plugins folder and sticking an empty folder in. It did not work initially but then I went to the permalink page and deleted the category base I had which was “category”, and saved it. It worked! I renamed the plugins folder back, and it all still worked.
So, thanks kellye for leading me to a solution, I hope this helps someone else.
