It is on the versioning settings page for the list or library.

Not quite obvious.

Have you went to the main site  and allowed other templates other than
the publishing  site on the sub levels? I was having a similar issue
and it was just changing a setting. When I was creating subsites and
stuff it was not asking what type of site to create until I changed
that setting. If you can't find  it by tommorow afternoon I will look
on my moss server at work to tell you were to look at.

Been having a hard time finding where this is defined myself...
especially in the site  definition. For now, I've just been creating
subsites that are something other than "Publishing Sites" using
STSADM... such as a "Blank Site".

Found the setting  but what find  it quite an hassle to
create new sub site  and then manually turning  it off for that site.

Have no luck looking at the site definition myself...

I suspect something is happening within one of the receiver classes in
one of the features that gets activated by the base Publishing feature
(PublishingWeb)... but alas, I haven't had time to reflect into them (or
see how far you can get before it's obfuscated).