Figured it out. Thanks you so much Till for your patience and valuable information.
I had "Allow zone transfers to these IPs" filled in with the server IP - which was allowing it to seem
like it was working before because I hadn't put the server IP into the settings. But was was happening is that all the sites that looked like they were working (the default 'Welcome to your website!' page) were actually all of the root domain, and not the sub domains. (i.e. all were routing to the zone transfer ip solely).
So here's what I did to make it all work:
Add the IP of the server to the "Edit Server IP" section under "System".
Added the root site (i.e. domain.com) to the "Sites" section. I made sure the server IP was selected, checked my checkboxes for cgi/php/etc and clicked SAVE.
Then added my domain into the DNS settings. Selected the only server, whatever client if any, the zone 'domain.com.' (don't forget the trailing dot), ns of ns1.domain.com., email of mail.domain.com and Allow zone transfers was blank. Made sure active is checked and clicked SAVE.
Opened that same DNS entry on the list and clicked records. added NS records zone: domain.com. nshostname: ns1.domain.com. - repeated with ns2.
This domain is hosted through godaddy, so i was sure to add the ns1.domain.com and ns2.domain.com into the host summary pointing to the server ip.
It all works!
Thanks again Till