What I am observing when attempting to view or group by category is it
remaining in table or phone list view, but adding an additional column
between the 'Sort by Icon' and 'Sort by Attachment' columns. When I run my
mouse cursor over the column heading nothing comes up indicating what it
might be and additionally I'm not able to 'Expand' or 'Collapse' in this
view, which I suspect is by design anyway, unless of course I was to
successfully drag the 'Categories' column heading into the 'Group by' box.
In short, I can sort and group by my other headings, as well as  filter, and
add/remove fields. It seems the only thing affected is when trying to group
by category. The Category column will remain but the category labels for
each record goes blank. But when going back to table view or group by some
other heading, the category labels for each record reappears once again.

As for Groupwise being the possible culprit, I figure I'd write in first
before diagnosising this possibility. But this will have to wait until
Monday. Have a good weekend. And thanks for the referral to the Groupwise
documentation. I'll give that a good read this weekend.

P.s. I agree with your Activesync assessment. For the moment this doesn't
appear to be the issue.