Out of stock products category

[brokenshadows]

Preface 1:  If this has already been answered in another post, please direct me there, and accept my apologies for not digging around enough.
Preface 2: If this is a stupid question, i'll admit to being a moronic new user...otherwise, i'll admit to thinking of something awesome, and demand to be called Batman from this point forward...

i am using VM 2.0.6 on Joomla! 2.5.4

i'd like to know how i can set Out of Stock products to show up in a "Sold Out" category.  i am building a site for someone who hand spins yarn.  each skein of yarn she spins is a one of a kind item.  As such, she will always have only one of each item, but she would like a way for customers to see past products.

example:

Light Weight Yarns
- item 1
- item 2
Mid-Weight Yarns
- item 3
- item 4
Sold Out

When someone purchases "item 2 the previous example would now show as:

Light Weight Yarns
- item 1
Mid-Weight Yarns
- item 3
- item 4
Sold Out
- item 2

i would also need to make sure that out of stock items could not be "ordered"...

here's hoping at least some of that made sense...