Category pages deliver a 404 even though posts are there associated with them?

[Diversified Woman]

Yesterday we upgraded our blog with a new Studiopress theme "Glitter" + "Genesis". We have not used StudioPress or Genesis on this blog prior. So far the install has went well and we have worked out many issues but the biggest one right now is that I notice none of our categories are displaying posts. If we click on any categories/ breadcrumbs we only get 404's "Page cannot be found" although the posts assigned to these categories can be viewed on their own as long as we don't select  a "category or click on a breadcrumb" to get there!

Really hoping someone can help with this.  I think perhaps I remember clicking on a category a few months back which rendered a 404 as well, after we did a WP upgrade to 3.2. I obviously didn't think too much about it at the time because the blog makeover was on the backburner due to other website projects that needed addressed.

So not sure how to begin to fix this and if it has to do with the htaccess it makes me a bit nervous to even go there.  Nonetheless it needs addressed.  If it is an htaccess issue, is this only pertaining to the WordPress "htaccess file" and if something goes wrong there will it affect anything outside the WP folder? The main website rests outside of the blog but still part of the same website. The WP blog is just in folder as part of the main site, which is the only reason I am asking. 🙂  

Our permalink structure is as follows: 
Day and name  http://ourdomain.com/blog/2013/01/25/sample-post/ 

Then in the "category base field"  it says  category

I never changed this since doing it the first time so don't think it can be the issue at hand.

I did try disabling all the plugins to no avail thinking one might be the culprit, although I have very few installed on this particular blog to begin with.

I am also running the most current version of WP.  Any ideas? Guess when it rains it pours!

[Diversified Woman]

I want to also add that there is another area under my Permalink settings which is filled in with code next to CUSTOM Structure, however it's not selected though.

It's typed in to say   /%year%/%monthnum%/%day%/%postname%/

So the only thing I see different between the one selected and the custom one not selected is that the one we DO have selected ends in "sample-post"  versus the one directly above stating "postname"

So I am really confused. LOL

[Diversified Woman]

The plot thickens .....

Only a couple of my "category" take me to a  more customized looking WP 404 page sayinging "We're sorry but that page cannot be found", yet my blog is still very much visible to them. Hereis an example of how the ending string for the url looks for these:   blog/category/wedding-trends/

However 6 more categories for this bridal blog are taking me to 404 pages with a white screen giving me the standard 404 message and these 404 pages end in unique urls paths with the following below. Perhaps this may shed some light on it. I didn't place the full urls here though.

blog/?cat=7
blog/?cat=9
blog/?cat=3
blog?cat=377

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