Hey there,

What is the best menu structure? I tried creating one category hidden menu item but it did not work. I also tried crating a single item hidden menu bit it did not work.

It depend on the user how his current site menu structure look like.
May i know what do you mean it doesn't work after you created hidden menu for one of the single category menu item?

1. Do I need to create a hidden menu for each category? Do I have to do it for subcategories as well?

If you would like to follow back of your K2 URL, you have to create all of your blog categories to single category menu item. (Included subcategory as well)

2. What happens when more than one category is assigned to an article? Which menu will it route through? Will this create duplicate content and result in google search engine penalty?

It will display the `Primary` category alias in the post URL, so it will not cause duplicate content issue.

If I leave it on the homepage and do not create category menus, it gets routed through the homepage and I do have some extra information on homepage that I do not want displayed when reading an article.

If you didn't create any single category menu item in your site and you set as your Easyblog frontpage by default homepage, when you assign these module display on your homepage, it will appear when you view on your blog entry page as well.