I had understood from one of Fotis' Tweets, that the correct location for a custom template would be:

/templates/MYTEMPLATE/html/com_k2/MY_CUSTOM_TEMPLATE

Today I placed my template in that folder, but was not able to apply it to a category in Joomla's backend. It simply did not show up in the dropdown 'Select a template'.

Instead, I placed the template in:

/components/com_k2/templates/MY_CUSTOM_TEMPLATE

which did work for me.

Hi,
if original path is
/components/com_k2/templates/MY_CUSTOM_TEMPLATE
then following analogy, if you put files in
/templates/MYTEMPLATE/html/com_k2/templates/MY_CUSTOM_TEMPLATE
folder they are showing up. I just double checked it and it is showing in drop down list. Didn't yet changed actual template files.

Thanks Erebrum, this worked for me...

Erebrum thanks
yours worked
the documentation at k2community.joomlaworks.gr/notes/Templating_in_K2 should be changed