On K2 v2.6.2 I face followin issUE

If you create a new category the selector for Catalogue Mode=NO
You can klick and selcect YES

Once catalogue mode is YES and you want to klick and select NO there is no NO available.

Ist that a bug or a feature? :)

i have seen a similar behavior in the template select list on some installations.. if your adverterious y ou could get the svn version and see if it changes....try localhost first