When creating the forum you should set the parent as whatever forum you want it under
so instead of the parent being a catagory its another forum.
also make sure Depth of Forums - Forum Home is set to at least 2
Admincp>>vBulletin options>>Forum Listings Display Options
QUICK EDIT:
Betrockers mod/hack will make the subforums tidy so install it aswell
Beat me to the finish Betrocker...lol