After searching, and talking on IRC to find an answer for my problem, I'll post it here.

Setup:
Custom Nameservers (ns1.dbsource.net and ns2.dbsource.net)
Main Site DNS Works
Clients Site DNS Works


The problem so far is:
When the client tries to setup a subdomain, it never shows up. I had a similar problem with the Main site doing this but what I had to do was change the DNS Zone for the site. When I check the Clients DNS Zone, it appears normal (looks the same as the main site, except for site address).

I've checked the httpd.conf. Looks normal.

I had the same problem today. A client set up a subdomain through his CPanel. The subdomain showed up in the "List subdomains" in WHM, the subdomain directory was created in his public_html directory, but the subdomain wasn't accessible from a browser (http://sub.domain.com). I ended up having to edit the httpd.conf file and then run /scripts/fixndc to get it to work. I found out what to add to my httpd.conf file here: http://forums.cpanel.net/showthread.php?s=...light=subdomain

Still not working. I compared the httpd.conf from the thread to the one I have. All looks normal.

Thanks for the help.