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You need to edit you mainfile.php to point to the right directory. I'm assuming that you added your subdomain to your host account already and that your aware that it will need to propogate through DNS before it's available.
A trick I use is yourdomain.com/xoops and then set up the subdomain and wait. Once the propogation is complete (about 48-72 hours later) I add a redirect to my /xoops dir that points to my subdomain. For example, I am working on a new subdomain on my site for gamers (very incomplete right now). I installed it in mydomain.com/gamer and created the subdomain
http://gamer.stewdio.net . Once the sub made it's way through the net, I set up the redirect so that whenever someone goes to stewdio.net/gamer, it forwards to gamer.stewdio.net. I then edited my mainfile.php to reflect subdomain.domain.com so that when a user clicks on home, they go to the right address.
Hope that helps some.