You can use FrontPage or VS.NET to change  the direct mode pages for lists in
the 60 hive.

To change the web  parts that are provisioned and/or shown  when the new site
template configuration is picked by a user you will need to edit the
<ListTemplates> section of the ...60\TEMPLATE\1033\STSFOO\XML\ONET.XML file.
To change the way that any of the lists themselves are provisioned you will
need to edit the list's
...60\TEMPLATE\1033\STSFOO\LISTS\[listname]\SCHEMA.XML file.

Is there away you can change  the default.aspx in frontpage  from the

C:\Program Files\Common Files\Microsoft Shared\web server
extensions\60\TEMPLATE\1033\STSFOO folder

I have tried but as its not connected to the virtual server anymore
all the menu's disappear saying [The link bar feature is not
available in this web]. Ideally I would like to add my own bespoke
webparts as part of the template. Or when I am able to make it work
the images and ows.css need to embedded and therefore the path for
them is inserting into the code instead of a variable then the page
displays an error
Type 'Microsoft.SharePoint.WebControls.ProjectProperty' does not
have a property named '__Preview'.

Sounds like you will need to edit the SCHEMA.XML file for each list. It's a
tedious task.

The ASPX page  in the 60 hive is the direct mode page that contains the
necessary WebPartPage framework including the WebPartZones. It is loaded
into IIS cache and presented with the Web parts  that the SharePoint database
dictates. The ASPX page does not contain the Web Parts themselves.

I have a publishing portal created, and when I try to create a subsite,
the only template  available to me is the publishing site.
I know that there are many other templates  available but how can I get
them to appear as choices when I create a site?

This is by design....................

All you need to do is go to the site  Settings >> Modify All Site
Settings. Under Look and Feel you will see a link to Page Layouts and
Site Templates. This will let you control which Site templates  are
available within this site.