To add a category to User Notes.
Navigate to Users -> User Notes Categories -> Add New Category from the administrative backend of your Joomla website.
From here you will be taken to the main screen for adding in a new User Note Cateogry.
Give the category a Title and parent category if applicable. You may also set the permissions and access levels if nessary as well.
Lastly, you may set the user that created the category and then click the SAVE button.
Now that you have categories setup in your Notes, you can assign notes for users to these categories.