Creating Albums

[nowordneeded]

I'm having an issue with creating albums in my galleries. The gallery I'm going to use for this example is my current build here: http://williamsadler.org/gallery running the latest current stable version of 1.6.09. What I want is to have albums like the first screenshot I'm attaching. Instead I get the second screenshot. The albums appear outside the category listing. The only way I can get out of that happening is to do this:

In Photos > 1990 > In Photos - 1990 > 01/20/1990 - Event Name Here

I just want it: In Photos > 1990 > 01/20/1990 - Event Name Here

I'm not sure what I need to change in my config panel to get that result. Any help would be fantastic as I have never been able to figure this out.

NWN