Right click on the document and go to the "Search and Categories" tab.

I get it. I can't just copy say a client directory which contains sub
folders and have the entire folder categorized automatically. I guess I
have to create all the sub cat's under the clients cat'
I.E.
Category-> Clients
4c Foods
Letters
FILES
Spreadsheets
FILES
Yadayada
FILES

There are quite a few more sub folders that would ALL have to be recreated
manually.

Or setup keywords on the documents. Then use the category assistant to
automatically put documents  in categories.