Unfortunately, this setting category and tag as the base in the permalink settings did not work. We made a mega leap from 2.1.x to 2.6. Probably a bad move, and if worst comes to it, I can roll back and micro step. However, since some people have this same problem going from 2.5 to 2.6, I’ll be patient and hope for some other suggestions.
Also, in manage -> categories, I see blank rows (5) with blank category names, but each row has at least 10 posts in that category. When I manage -> posts, the blank categories are still blank with the checkbox. Looking at the database, all entries in wp_posts has post category = 0.
SELECT * FROM wp_posts
WHERE post_category
!= 0
–> 0 results returned
SELECT * FROM wp_posts
WHERE post_category
= 0
–> 119 results returned
HELP!