I suspect that the technical issue is that Step_1_Field_1 is a text field; however, the Parent Category field is expecting a Category object (not text).
So for this to work, you’d need to create the category and then find a way to make that category selectable within the same wizard. That might not be possible - nor wise!
May I suggest that you separate the tasks (category and subcategory) into two separate wizards? If you need them to be linked together, you can chain them by making the first redirect to the second one.
Looks like chaining them together hits the same issue as the wizard can’t select the category until it has been created and the form actions are pre-set in the form at the time when the wizard is created.
A workaround that would work is if i asked users to ‘confirm’ their school from a drop down of all categories in the 2nd wizard, as the 1st category would have been created bt then. I can’t see a way to select categories in the dropdown option though.
Yeah - you should be able to do that with a Category field. Unfortunately, this will serve up all of the categories on your site, and you won’t be able to narrow it down easily for the same reason.
Have you considered using Tags as an alternative to subcategories? You won’t get hit with this limitation, and they might do the job.
Otherwise, you might just need to make a manual step in there - i.e. make creating schools an admin task that a user requests. This would also help by ensuring your site didn’t get out of control with too many categories (or duplicates).