It looks like I was involved in the original discussion, but I can't find any record of anything pertinent that I said.
All I can tell you now is that I do not see the problem in either Q2008 Premier R9 or Q2009 RPM R6 (Windows XP Pro). I checked both the Category field drop down and the register menu Transfer form; hidden accounts do not show when "View hidden accounts" (Q2008) or "Show hidden accounts" (Q2009) is unchecked.
There is, what I consider, a bug in Q2009 that could affect one's perception of this situation. Whenever you hide an account in Q2009, Quicken automatically puts a check mark in "Show hidden accounts". If you don't catch that as you're leaving the Account List, you'll start seeing hidden accounts where you did not expect to see them, and probably not realize why.