categories gone under “Flash News” Options

Website: https://www.ho1designs.com
I’m using Flash News Theme.

Problem: Under flash news options, you can set which category you want the featured story to pull from. Since I rebuilt this site with Flash News theme I never had any problems, but now none of the categories are showing to set the category I want to put those posts on the “featured story”?

I upgraded to WP 2.8, didn’t see the problem after that. I installed
2 plugin’s but have deactivated them to see if one of the two were the problem, no luck.

Does anyone have any experience with this theme. It was a premium theme but since using it I have the opinion it’s abit buggy.