I have had the same issue. By default, the function which displays the dropdown of post categories hides categories that contain 0 posts. To change this, change:
<?php wp_dropdown_categories( array( 'name' => $this->get_field_name("cat"), 'selected' => $instance["cat"] ) ); ?>
to this:
<?php wp_dropdown_categories( array( 'name' => $this->get_field_name("cat"), 'selected' => $instance["cat"], 'hide_empty' => false ) ); ?>
in the cat-posts.php file.
