Ok, I was able to resolve this. I believe there is an issue here, but my workaround will work for me.
When creating a category and selecting the Joomla groups who have permission to create groups in this category it will not override the general settings found in the GroupJive configuration. In other words you must go into the GroupJive congifuration on the Groups tab and then general tab and find the "Create Access" dropdown. You must select the appropriate create groups here first. In my case I had to go here and choose "TeamSheet_Manager" for it to work over the on category of "TEAM SHEETS" i explained in earlier post. If you do not give access on this main default configuration page it will not work even if you selected it over on the create category page. I think this is a problem because for one its not intuitive admin design, and secondly you can't make multiple choices of groups in the default setting to give access. So basially you are limited to "moderators, administrators" by default and one other group you select.
Not sure if that all makes sense, but it's what i found if it may help anyone.
Thanks