I deleted and re-created a few products categories in the free version, and now they won't display correctly on the Products page after I checked the "Group products by categories" box in the "Products Listing Page" block in CMS layout.
 
The Products page is showing products grouped in subcategories and the main category again, some of which are not even in the correct subcategory order.
 
Most of the original category_id sequence (from 48 to 60) are gone from the database, replaced by higher numbers.
 
Can anyone offer any suggestions ? Thanks.

One possibillity is that the deletion of categories doesn't reuse the category deleted id_sequence and the database just adds the next numbers incrementally. Hence you might be coming up against the free version limitations ie. products 50, products categories 10 ?