Nobody else uses them obviously so my limited knowledge found a way around it to add them myself.
In template "adv_portal_newsbits"
-------------------------------------------------------
Find
<IF condition="$news['avatarpath']">
-------------------------------------------------------
Above add
<!-- News Category Images --> <if condition="$news[forumid] == '38'">
<img align="$stylevar[left]" style="padding:6px" alt="" border="0" src="$stylevar[imgdir_misc]/gamingnews.gif" title="Gaming News" />
</if>
<if condition="$news[forumid] == '48'">
<img align="$stylevar[left]" style="padding:6px" alt="" border="0" src="$stylevar[imgdir_misc]/technews.gif" title="Tech News" />
</if>
<if condition="$news[forumid] == '54'">
<img align="$stylevar[left]" style="padding:6px" alt="" border="0" src="$stylevar[imgdir_misc]/softwarenews.gif" title="Software News" />
</if>
<if condition="$news[forumid] == '63'">
<img align="$stylevar[left]" style="padding:6px" alt="" border="0" src="$stylevar[imgdir_misc]/oznews.gif" title="Oznetgamer News" />
</if>
<if condition="$news[forumid] == '70'">
<img align="$stylevar[left]" style="padding:6px" alt="" border="0" src="$stylevar[imgdir_misc]/entertainnews.gif" title="Entertainment News" />
</if> <!-- End News Category Images -->
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Of course you need to change the forumid's to the ones that you use for news.
Then create, name and upload the images you will use to the style you are usings misc dir.
The gif names here are my example only, change to whatever you like along with the titles.
You may add or take as many of these away as you need to so it suits how many news catagories you use.
The end result is visable here (http://www.oznetgamer.com) if you wish to see it in action.
Hope this helps for anyone wanting to use News Catagory Images.