Post Categories and Link Categories Explained

That is, I need it explained to me!

Just spent almost two hours reading and all I can find is people with problems, but no answer to be found.

Is the merging of the Links and Post Categories still an unsolved situation? If not, would someone please point me to the solution thread??

fyi: my problem is in getting ALL of the Categories to show up in both Links and Post lists. What’s the fix?