User registration on sub site

What you’ve described is default behavior for WordPress where when a user registers on a subsite, they’re really registering with the root site.

Check out this plugin, which looks to help with new user sign ups and adding them to the right subsite.

http://wordpress.org/extend/plugins/wpmu-default-user-role/

If that plugin isn’t what you’re looking for then perhaps this one is.

http://wordpress.org/extend/plugins/multisite-user-registration-manager/

A couple options for you to check out.

A word of advice, be sure to back everything up (including your database!) in case something goes wrong, you have a way to go back to a working site.