Hi Kane,
I am sorry for the delay of this reply.
Regarding the option 'exclude sub categories', this option tell the module to not fetch the sub-categories but for the parent categories, it will still show the subcategories count. If you want to remove the subcategories count, you will need to customise this module to remove the sub categories count.
Attached tree_item.php file is the customized theme file where it hide the subcategories count
Download the file and copy the file to JOOMLA/modules/mod_easydiscuss_categories/tmpl/ and overwrite the existing 'tree_item.php'. Remember to backup your original file before you overwrite with the customized version.
Hope this help and have a nice day!