Have created a new site using JOOMLA! 3.0 and K2. If I create new categories within JOOMLA the "Latest News" and "Most Popular" modules see them without problem. However, the modules don't see K2 categories at all.

Is this a K2 problem or that of the new J3 environment?

You probably need to use the mod_k2_tools or mod_k2_content modules

Site is www.freedominamerica.us/joomla3

Thanks for the response... !!

I've found the K2 Tool module and have created "TEST" and placed it where I want it. But I don't see how I am able to filter for only the latest items. It really seems that module is more for pulling specific content to create a page layout, not as a menu similar to Latest News or Most Popular ...

Can you explain how you would do it?