I appreciate the updates and complete description you've provided above, @Wiltshs. I'll make sure to help you in completing your task of merging your accounts in QuickBooks Online (QBO).

You're already on the right track in merging your accounts. Based on how you describe your screen, I can tell that you're using the new QBO version when editing a category. Please see the screenshot below for your reference.

You're correct. The error you've encountered is due to your Novo account being connected to online banking. Default and those accounts connected to online banking can't be merged or deleted. With this, you can temporarily disconnect your account to merge it to the duplicate one. To do this, here's how:

1. Go to the Banking menu.
2. Select the Banking tab.
3. Choose the tile for the bank account.
4. Click on the Pencil ✎ icon, then select Edit account info.
5. Press the Disconnect this account on save checkbox. Note: If QuickBooks is downloading new transactions, you won't see this option. Wait a few minutes for the update to finish and try again.
6. Click Save and Close.

Once you're done, go ahead and merge your accounts. Please note that this process is permanent, and you're unable to undo this later on. For the step-by-step guide, you can refer to this article: Merge duplicate accounts, customers, and vendors in QuickBooks Online. 

Then, reconnect your account to online banking if necessary. This way, you can download and categorize your transactions accordingly. Please check out this article for the complete details: Connect bank and credit card accounts to QuickBooks Online.

Also, I would encourage you to reconcile your accounts every month. This will help you effectively monitor your transactions and detect any possible errors. For the step-by-step guide, I'd recommend checking out this article: Reconcile an account in QuickBooks Online.

Please don't hesitate to let me know in the comments if you have other banking concerns and questions about merging accounts and managing transactions in QBO. I'm always ready to help. Take care, and I wish you continued success, @Wiltshs.