Restricting A Category From Promotions

I've searched all over the web for how to restrict a certain category from my promotions and everything I see/try fails. Could someone pleases help me?

My company wants to do a giveaway of a product for a purchase of $39 of all regular priced products. I've set up the promotion as follows:

If ALL of these conditions are TRUE :
*Subtotal equals or greater than 58.99
If an item is FOUND in the cart with ALL of these conditions true:
*Category is not 822
*Sale is No

The $58.99 includes the free product as w/o it they would get the product with a $20 purchase. The category I'm trying to exclude is a clearance/closeout category and I'd also like to exclude any other item on the site that is on sale (I made a product attribute for this). Am I setting something up wrong? Thanks in advance for any ideas!