Thank you very much Atul.
Its working now.
Below is that I have done.
1. Create catalog profile (and others) as per ur link above.
2. Create a NEW schema, and make sure this application areas are entered.
Add in this sequence:-
1. Service Request/Incident - Subject Profile - ur profile
2. Then add KA (causes)
3. Problem (Overview)
4. Service Request/Incident (Overview)
(if by default Subject Profile is already entered for this row, you might get a bsp error).. so, please try to change to others first (first column), then change "Subject Profile" to other entries (middle column), then enter back Incident (first column).
5. And looks like Incident and Problem does not support (Overview) (you multilevel catagorization will be disable when you enter incident or problem). After adding the other 2 (Defect Location...).. it came back.
6. Make sure you have added the "Subject Profile" to sub levels.. (as per ur link above).
7. For each level, you need to Assign a KA for that catagory (as highlighted by Atul earlier).
8. Then activate this schema (from Draft to Released)(time valid=add 10mins)
Then I tested my Knowledge Articles, and its working 
(which is, i select the categories in multilevel categorization, and then, in Knowledge Article Assignment Block, click the "Suggest KA".. and you will get the KA assigned to the catagory earlier.
Thank you very much Atul.