From the Moneydance menu bar, go to Tools > Categories
Locate and highlight the 'Band Expenses' instance of 'Office'.
Click the 'Edit' button at the bottom of the window.
In the resulting from, check-mark the 'Inactive' check-box. Click OK
Doing so should remove Band Expenses:Office from most drop-downs while retaining the categories' transactions for historical purposes.
Thanks, Kevin, your solution works for this particular circumstance. However, if both categories are still needed, this won't help. I'm hoping that someone from MD will acknowledge this as at least unacceptable behavior, if not a bug.