Ok, is your subdomain physically located within the document root of the parent domain?

Ex:
/home/domainuser/public_html = http://www.example.com
/home/domainuser/public_html/subdomain = http://subdomain.example.com

Or, are they in completely different locations? If it's the second one, is the .htaccess for that site located in the "public_html" part or the "subdomain" part?