Ok I found a solution thanks to this: Using wp_dropdown_categories in widget options
Here is the code I used instead:
function form( $instance ) {
/* Default Widget Settings */
$defaults = array(
'title' => 'Highlight Category'
);
$instance = wp_parse_args( (array) $instance, $defaults );
?>
<!-- Widget Title -->
<p>
<label for="<?php echo $this->get_field_id( 'title' ); ?>"><?php _e('Title:', 'thstlang') ?></label>
<input type="text" class="widefat" id="<?php echo $this->get_field_id( 'title' ); ?>" name="<?php echo $this->get_field_name( 'title' ); ?>" value="<?php echo $instance['title']; ?>" />
</p>
<!-- Category Select Menu -->
<p>
<select id="<?php echo $this->get_field_id('kwtax'); ?>" name="<?php echo $this->get_field_name('kwtax'); ?>" class="widefat" style="width:100%;">
<?php foreach(get_terms('category','parent=0&hide_empty=0') as $term) { ?>
<option <?php selected( $instance['kwtax'], $term->term_id ); ?> value="<?php echo $term->term_id; ?>"><?php echo $term->name; ?></option>
<?php } ?>
</select>
</p>
<?php
}