Hi Micheal,
Thanks for your screen shots ITSM transactions like Service Requests, Incidents, Problems use the transaction type/Catalog Category and not the subject profile, hence if you have made the entry for the subject profile you need to remove it.
Next Check in customization in the below node
CRM-CRM Cross Application Components-Multilevel Categorization- Assign Transaction Type to Catalog Categories if you have maintained entries for Problem and Incident Management. Check if you have maintained the correct catalog category say D in your case as per the screen shot pasted in the application area of the schema, they both should match.
Kind Regards
Atul