This is Martha from the Shopify Team.
Sorry to hear you're running into trouble getting collections set up. There are two options for collections in the Shopify Admin;
The way these collections work are exclusive of each other and cannot be changed from one type to the other after products have been added.
Take a look at the links above for some more info, or feel free to contact support directly for some more information.
I am having a very similar problem. I am setting up my store now and have been entering products for the past week or so with no problems. Well, I should say the problems that occurred I resolved by changing the method from auto to manual on the collections setting (even tho I was doing everything right with tags etc..the items would not fall into the category so I saw where someone said use manual and it worked) As I was saying, I have been entering new products and manually choosing the category and it's been working fine...until yesterday 8/29/19 when my drop down category list shrunk to only a few categories and when I typed the category I was looking for in the search box it does not show up at all. Now this morning 8/30/19 my categories are only showing ONE option (and I have several). When I go to the Collections (to edit/add collections etc.) they are ALL there. I have not changed any settings... Is this shopify's problem?? Are they having a glitch??? I just don't understand why everything is fine for several days and now having a problem!! VERY frustrating to say the least and makes me wonder if I made a correct choice with Shopify. I'll attach a pic to help show my problem...
I am having the same issue as the others. I create two collections, BUT only one is showing when I try to add products. I wish this was a little more user friendly. It's taking forever for us to set up our store like we want. Paying for months we are not even up and running :/. Is there another way we can fix this. How can I chat with an actually person. The videos are not helping. Thanks in advance.