1. There are no actual subcategories to Regional: Asia: India: Rajasthan: Arts and Entertainment. Regional: Asia: India: Rajasthan: Arts and Entertainment: Udaipur has, as you can see, an @-sign next to it, which means that it is located in a different place in the category tree. So the category you are asking about is actually Regional: Asia: India: Rajasthan: Localities: Jaipur: Arts and Entertainment. As soon as that category is created, which will happen once there are enough sites for it (and it doesn't need to be more than a couple of sites), there vill be an @-link there from Regional: Asia: India: Rajasthan: Arts and Entertainment.
2. Yes, for some reason it didn't show up in count. I removed the link and added it again, and it appears to be fixed. Thanks for pointing it out!