How to create and manage categories in PrestaShop 1.5-1.6
To add new categories and manage the existing ones, log into the admin panel of your PrestaShop and go to Catalog menu>Categories sub-menu. On the page that opens there's a table with the existing categories; there are a few sample categories. On the right side of the table there are some buttons for managing these categories. The one that looks like a pencil opens the edit form with all the category settings. If you click on the arrow button next to the edit button a drop-down menu will appear; it will display the trash can button is for deleting the category (in PrestaShop 1.5 the delete button has its own column in the table). When you click on it a menu will appear from which you can select what to do with the products in the category. To disable a category so that it's not shown on the frontend click on the green check mark in the Displayed column in the table. To move the position of a category use the arrows for the respective category that are in the Position column of the table. This change of position is also reflected on the frontend in the Categories menu.
To add a new category click on the Add New button that's in the top right corner of the page. This will open the add/edit category form. The only thing that you're actually required to configure in order to be able to save and create the category is to type a name for the category in the respective field. Of course, there are other settings that you can configure. The Displayed option is enabled by default; if you disable it, the category will not be shown on the frontend. The Parent category option is actually a list of the existing categories; you can use it to select the parent category of the category that you're about to add. You can use the Description built-in text editor to type a description for the category. To upload a category image click on the Add file button (in PrestaShop 1.5 it'sBrowse) that's next to the Image option and use the window that pops out to find and upload an image from your local computer. The image will be shown at the top of the category page on the frontend.
Next, there are three meta options for a title, description and keywords. They are not required. These are used for improving the search engine ranking and visibility of your category. If you want to, you can type respectively a title for the category, a short description and some keywords related to the category. The Friendly URL option is required but it's automatically filled with the name of the category, so it's not a problem if you leave it blank. If you want to, you can specify the friendly URL of the category yourself. Don't type the whole URL address, just the part for the category; use hyphens to separate words (e.g. name-of-the-category). By default, friendly URLs are disabled. You can enable them from Preferences menu>SEO & URLs sub-menu. The last option is Group access and you can use it to determine which customer groups have access to that category. By default, all customers are able to visit the category. After you're done don't forget to click on the Save button.
For some more details and screenshots read the tutorial on how to add and manage categories in PrestaShop 1.5.