Can't quite see how categories percolate through to the index page, but that's probably a matter of template customization, I guess.

Ok, I'm just about to email you my "Front" template for d-log.net. I shall add the category index template too. The category indexes will be stored in your archive directory, with names like cat_WHATEVER.html - you need to put a little navbox on your front page, linking to them. Also, each one may not show up until you have posted to that category.

Email me for any more help you need. Also see this article I wrote about MT templates, if you're interested.