When can I log PIC time in a new category of aircraft? I am currently a Private Pilot Rotorcraft and I am doing an addon for ASEL. When can I log PIC time? 

I've been told it's only when you're the solo occupant but after some reading I'm not so sure. 14 CFR 61.63(d.2) says:


  Have received training required by this part that is appropriate to
  the pilot certification level, aircraft category, class, and type
  rating (if a class or type rating is required) for the aircraft to be
  flown, and have received an endorsement for solo flight in that
  aircraft from an authorized instructor.


Do you have to have your license in category to log pic time? Or is it after you have received your instructor's endorsement to fly solo per 61.63? 

When I showed this to my instructor and we did the endorsement in my logbook we received some backlash from the flight school saying that PIC time is only accrued after you have your PPL in the applicable category of aircraft. During my flight lessons I was always operating the aircraft for the entire duration of the flight after I had received my solo endorsement which satisfies the requirements for PIC time per 61.51(e.IV).

Am I misinterpreting the rules? Can someone point out to me why I wouldn't be able to log PIC time even though it's in a different Category? Thanks for the input!
Short answer: you can log ASEL PIC time only while flying solo, not while flying with an instructor.

You seem to be mixing up a few regulations: you quoted 61.63 but the text is actually from 61.31. However, since neither of those regulations are about logging time anyway, they aren't directly relevant.

The rules on logging PIC time are in 61.51:


  (e) Logging pilot-in-command flight time. (1) A sport, recreational,
  private, commercial, or airline transport pilot may log pilot in
  command flight time for flights-
  
  (i) When the pilot is the sole manipulator of the controls of an
  aircraft for which the pilot is rated, or has sport pilot privileges
  for that category and class of aircraft, if the aircraft class rating
  is appropriate;
  
  (ii) When the pilot is the sole occupant in the aircraft;
  
  [...]


(e)(i) says that you can log PIC time as sole manipulator only if you're rated in the aircraft. In your case, you aren't rated for ASEL (yet!) so you can't log ASEL PIC time while flying with an instructor, even if only you touch the controls. This is probably what the school is referring to.

However, (e)(ii) says that a private pilot who is the only person on board the aircraft may log PIC time, without any additional requirements (although other regulations do require an endorsement in order to solo, as you said). 

That means, you can log solo ASEL time as PIC, but not training time with an instructor.