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please after new install latest version admin panel GET PROBLEMS W Document Root Override, SEE PICS
If you want it like that, you might either customize document root or create the subdomain as a domain (remove the existing subdomain first)
Normally, when you create a subdomain, you can reach it via both
http://sub.domain.com and
http://www.domain.com/sub/ so that is default.
If you want it like you want, again, the easiest way is to remove the current subdomain and add the subdomain in domain manager as a domain.