WordPress subcategories return 404 in custom template

I have seen the magic “.” break a lot of sites paginations and do errors to such issues as yours (return status 404 for subcategories). Try installing a plugin named “WP No category base” (link below) and remove that dot from the category base. Save permalinks a few times after installing plugin and hope that works (it did for me!).

http://wordpress.org/plugins/wp-no-category-base/