function showTree($index=0, $tree, $depth=0)
{
	foreach($tree as $key => $value)
	{
		$key = explode("_", $key);
		
		$thisid = $key[1];
		$this_parent = $key[0];
		
		if($this_parent == $index)
		{				
			echo str_repeat(" ", $depth).(($depth==0) ? "" : " - ").$thisid."\n";
			showTree($thisid, $tree, $depth);
		}
		else
			$depth++;
	}
}

function buildCategoryTree()
{
	global $mysql;
	
	$categories = $mysql->query("SELECT * FROM `categories`");

	while($row = $categories->fetchArray())
	{
		$tree[$row['parent_id']."_".$row['id']] = $row['name'];
	}
	
	return $tree;
}

showTree(0, buildCategoryTree(), 0);

OUTPUT:

1
        - 8
        - 9
                  - 11
                       - 25
                       - 26
2
             - 13
             - 14
                      - 24
3
          - 10
                 - 18
                 - 19
                 - 20
4
5
            - 12
                    - 21
                    - 22
                    - 23
6
7
               - 15
               - 16
               - 17

SHOULD BE:

1
 - 8
 - 9
   - 11
 - 25
 - 26
2
 - 13
 - 14
 - 24
3
 - 10
 - 18
 - 19
 - 20
4
5
 - 12
 - 21
 - 22
 - 23
6
7
 - 15
 - 16
 - 17