You are overloading the taxonomy category. Learn to use custom taxonomies. Some of your categories are in fact series, others belong into their own taxonomy too.
Replace the hard coded navigation ul with a nav menu and look into the TwentyTen theme: it has a working solution for your problem. You can use your own walker to adjust it even more.
But the first step to get a more professional look for your website is: drop Comic Sans. 😉
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