If I've understood you correctly, I solved this problem not long ago with the help of a posting on this forum.
Open file action.browsecat.php (should be in folder modules/News)
Around line 31 replace this line:
$query .= ' ORDER by hierarchy';
With this line:
$query .= ' ORDER by long_name';
To show the list of categories in their alphabetical order put this in your page or page template:
{news browsecat="1" category="Articles*" sortby="news_title"}
Check News module help for other parameters. Articles is the parent name of the category, the asterisk * shows all the child categories (sub-categories).
See this page for a live example of a category list in alphabetical order:
http://www.kidsinmadrid.com/en/kim-business-directory.html