Answer:

For details on custom taxonomies and post types, please visit the WordPress codex.

The red code goes on line 36 in the ocmxtheme-setupportfolio-post-type.php right after the portfolio-category line, but before the closing }

/****************************************************************/
/* Portfolio Post Type Custom Meta, here used to add a category */

register_taxonomy( 'portfolio-category', 'portfolio', array( 'hierarchical' => true, 'label' => 'Categories', 'query_var' => true, 'rewrite' => true ) );
register_taxonomy( 'portfolio-tags', array('portfolio'), array( 'hierarchical' => false, 'labels' => array( 'name' => __( 'Portfolio Tag', 'obox'), 'singular_name' => __( 'Portfolio Tags', 'obox'), 'search_items' =>  __( 'Portfolio Tags', 'obox'), 'all_items' => __( 'All Portfolio Tags', 'obox'), 'parent_item' => __( 'Parent Portfolio Tag', 'obox'), 'parent_item_colon' => __( 'Parent Portfolio Tag:', 'obox'), 'edit_item' => __( 'Edit Portfolio Tag', 'obox'), 'update_item' => __( 'Update Portfolio Tag', 'obox'), 'add_new_item' => __( 'Add New PortfolioTag', 'obox'), 'new_item_name' => __( 'New Portfolio Tag', 'obox') ), 'show_ui' => true, 'query_var' => true, 'rewrite' => true));
}