That product is appearing there since you did not select a category for that item to appear under. Edit the product and select a category.
You are of coarse correct.
When I created that product I wanted it in all categories, so I just checked each box and did not select a category from the drop down menu. Now that I have selected a category from the drop down menu it looks like I wanted it to. thanks!
The other option is to allow items in the main page by not selecting a category.
Make sense now, thanks again!