I managed to get sub-categories showing on the category page with images, but now since updating 1.9.2.1 up to 1.9.2.4 it no longer works. I cant imagine what may have changed and haven't altered anything.
I followed this tutorial:
http://www.templatemonster.com/help/magento-listing-sub-categories-on-a-category-page.html#gref
Looks like the block code:
{{block type="catalog/navigation" template="catalog/navigation/subcategory_listing.phtml"}}
in the static block just wont get executed. Any help please????