Is this an example of a category error?

 Yes, this is the monist view. The above-proposed argument against materialism is dualist as are most listed dictionary definitions.  ( see Mustangs, Monists and Meaning Dr. Michael Shermer)

1. Truth is immaterial.

2. Therefore, materialism is false.

Here it seems like it defines some meta physical truth or maybe something being absolute it seems like ambiguity fallacy because it isn't clearly defined what they meant by truth metaphysical or a concrete truth about the world like electrons orbiting.

I think the problem here is one of a category error.

Truth is immaterial, just in much the same way as the number 2 or the colour blue is immaterial. 

However, neither of these can exist independently, and are meaningless on their own, unless used to describe something else (which may be immaterial or physical).

Materialism deal with things that CAN exist entirely independent of anything else.

The argument against materialism is largely a religious one, where it is claimed that the "soul" or "spirit"  continues to survive after normal death. 

Now comes the crunch - these entities are alleged to exist independently, but are immaterial - in other words, composed of nothing, which is a logical contradiction.

Therefore, "materialism is false" is a false conclusion.

I think that soul and other things have no concrete proof but I think this is what op meant.

In Christianity only God is purely immaterial - souls, angels etc. are material compared to God. God is not immaterial because he is the opposite of material - He has no opposite - He is the uncreated who invented and brought forth time, space and matter - the material world. The spiritual (technically not entirely immaterial) world is a level above ours in terms of how refined it is, just as our physical world is a level above the software worlds we create in terms of its solidity.

When I use VR, I often find myself in much larger spaces than the one I am actually in, and I am able to traverse large distances in these worlds, sometimes at high speeds (if I'm in a racing or flying game.) Even though i have not moved, according to the rules of the software, its natural laws, I am entirely convinced I have changed location, and I act as if I have.  While I'm in that world, the real world disappears, it becomes the 'immaterial' of my virtual environment. Until I accidently punch the wall where I only see empty space in front of me.

Thus we have a human created analogue of the boundry between the material and spiritual/immaterial realms. One contains the other and they co-exist, even though they follow thier own separate rules. The difference between them does not negate one or the other.

Well, I still maintain that "immaterial" is just another way of saying "composed of nothing", so for an independently existing entity (ie God), it simply seems like a logical contradiction.

I think you are begging the question. That the immaterial cannot exist is based on the assumption that only the material can, which is just restating the same idea in another way. Your premise assumes the truth of your conclusion.