To have emails under a subdomain, you have to create the subdomain seperatedly as domain.
So first remove the current subdomain same way as you created it.
Then use the "create domain" option and enter the subdomain name.
After that you have the subdomain as domain, meaning with the same options, so you can create email accounts in the subdomain too.
For this to be possible, you might need to uncheck the "check subdomain owner" option in Administrator settings.