A Subsite that you create in SharePoint Server 2007 does not inherit master page settings from its parent site, and you receive error messages on the Site Master Page Settings page.
You create a new Subsite in Microsoft Office SharePoint Server 2007 by using a template other than one of the templates on the Publishing tab of the New SharePoint Site page. For example, you create a subsite that is based on the Team site template. When you view the Site Master Page Settings page of the subsite, you experience the following symptom:
The Subsite does not inherit the master page settings from its parent site. That is, the subsite does not inherit the system master page or the site master page that is configured for the root site of the site collection. Instead, the Subsite uses the default system master page and the default site master page.
You receive the following error message: The site master page setting currently applied to this site is invalid. Please select a new master page and apply it.
This behavior occurs if the following condition is true: The Subsite is based on a template other than one of the templates on the Publishing tab of the New SharePoint Site page.
Workaround for this behavior:
Activate the Office SharePoint Server Publishing feature on the Site Features page of the Subsite.