I see that Fatty Matty tackled this issue by replacing the &nbsp; with <br> so that on the main page the subcats won't just keep making the page wider.

I tried to remove the second nowrap tag in functions.php but because of the &nbsp; tags immediately between the links, they still don't wrap.

Where did you find that &nbsp; tag Matty?

I thought it was this line in functions.php, but it didn't seem to do it:

$cat_html .= "&nbsp;<a class=\"subCategory\" href=\"./directory/" . $gtc_array[cat_id] . ".html";

Thanks

I figured this out. I had to go into Edit Categories and set the Children Categories Options to Vertical.