Hi Troy,
Thank you very much for your kind words!
It’s all right, there are many many options on the back-end, it’s very easy to get confused. To me it seems familiar, but I am working on this for 10 years now.
The main issue with your setup is that you want to filter items from across the network – and that unfortunately is not going to work. It is now a plugin limitation, but WordPress has separate database tables for taxonomy terms on each multisite blog. Terms are stored by IDs and are not distinctive across the sites – so a term by ID=123 can be “category X” on one site and something else on another (or it may not even exist).
That makes filtering/excluding by term IDs virtually impossible on multisite networks. I’m am not aware of any possible solution to this at this moment, I’m sorry.