Hunh? How does Classifieds exactly work?

Hi, it's probably me but I can't figure out the Classifieds plug-in. I'm having trouble creating a basic ad through the front end. I don't understand how to add new Tags or Categories .. and none are displayed in the default set-up. (See attached pic) Are the tags being pulled from existing WP posts or am I creating new ones?

The other question I have is how do you suggest users are notified of how to create an ad? Currently visitors who are not logged in do not see any options.

Thanks

The site is WP 3.3 Multisite, PHP 5.2, MySQL 5.1