Its definately not working as I expected. It appears that sub sites are inheriting the security settings that were in the parent site when the sub sie was created.
I have Related Sites mode enables in config.
Thats the way it was designed to work. All sites need the same security settings if using related sites mode so after site creation those settigns are hidden and also you should not make them different than the root site. I did not design it allow custom settings in child sites in related sites mode.
There is no point in disabling site registration in the root site since registering in any of the sites is registering in all the sites. You might remove the registration link from the skin in the root site but anyone who registers in any of the sites can sign into the root site or any other site in the installation.
Sorry if that is not what you were looking for but that how related sites mode works.