@David: So I understand this.... Robin cannot send to categories and your testing bears this out.
AaronHur has a greyed out send mail on the alternate menu. I don't want to hijack Aaron's thread chasing a different problem (too late?). So I will wait until Aaron posts again.
to answer your question though...I was at 2011 and I did upgrade to 2012. I don't recall having category issues at the time.
I recently reinstalled seven and no, these tests were not 2012 on top of 2011. Still I do not reccomend rolling back to WLM 2011.
Can we move this discussion over to Robin's thread? http://www.sevenforums.com/browsers-mail/269840-there-bug-windows-live-mail-essentials-2012-upgrade.html