Do you have a default category selected? I'm intrigued as to why it doesn't pick it up from the existing category, so there is a bug there, and I'll hunt it down and squash it
You can do it through the Form Manager, you look at Categories within the Form Manager and you will have a drop down box of all the categories available. Simply select the default one from that.
I do suspect though that if you have the Categories hidden on the form (as it was at the start), then it may well change the Category when a user edits a listing. The changes you've made to the setting should bypass that potential issue. Will check up on this for the next update so we can get it resolved one way or the other.