A .vstemplate file defines a template for an item that appears in Visual Studio's "Add New Item" dialog. But it doesn't have an option to choose which of the categories (shown in the left part of the dialog) it will appear in.
I know of two ways to use the .vstemplate file and there are two different solutions to specify the category.
If you are simply copying the template to your Documents\Visual Studio XXXX\Templates\ItemTemplates\Visual C# or similar folder, just create a subfolder named the same as the category you want. It seems that Visual Studio processes these folders once when the first Add New dialog is opened and ignores further changes so it needs to be restarted in order to refresh.
If you have a VSIX add-in with a VS project containing item templates, you need to right click on an vsitemtemplate file in the Visual Studio solution explorer, choose Properties, and in the displayed properties window set the Category property to your desired category name. Note that the Category property is invisible unless the Build Action for the file is set to VSTemplate - but if it isn't, then the template won't work anyway.