Membership and Category protection not working

I have a wp multisite (3.03) and buddypress (1.2.6) site with Membership (1.04) installed and enabled. I have also tried this on a non-buddypress site (wp multisite 3.03 and membership 1.04)... same result.

The Membership plugin has been installed as per instructions and Categories and shortcodes have been set-up:

Categories: Guest, Member
shortcodes: guest_sc, member_sc
membership levels (both levels active):
- Guest (certain pages allowed, and Guest Category allowed, after more tag content disallowed)
- Member (additional pages allowed, and Member Category allowed, after more tag content allowed)

Stranger Settings set to 'Guest' membership level and User Subscription set to 'None'.

I have been trying to get Category protection to work. And it doesn't work, on my site. Accessing site as a guest (i.e. not logged in in any way) and the blog lists ALL posts regardless of category protection. More tag protection works as does shortcode protection within the post.

But, Category protection, can't seem to get that to work at all. My expectation is that any Post with a Category of "Member" should NOT be shown to a guest website visitor (first of is this expectation correct?)

Some help please on where to go with this....