I have JMS installed on our main site for management. Using Joomla 1.7.3

1) I have a full Joomla installation installed in a sub-directory {root}/110022
2) I want to use that Joomla installation for further sites from 110022
3) Want to have the site_id be automatically set when a user creates a site
4) Want all in directory like:
{root}
- {newsite} in a directory of the {site_id}

Cannot find a way to create a template from another install of Joomla.

If you want to create website from the front-end, get inspired of the tutorial video 14 and 13
www.jms2win.com/en/tutorial#jms12x-14
www.jms2win.com/en/tutorial#jms12x-13

The present the creation of JMS template rule to do such similar thing.
Up to you to change the domain name and the deploy folder with a site ID that you can automatically generate from the user ID or random number or any rule that you will defined in the JMS Template "to Site ID" field.

Not sure if this really helps me. The videos are good. When I create a template how can I make sure it creates a database from install 110022 and not master? Not available in drop-down.

If you want to create the slave site into another DB, you have to enter the value in the field "new DB name" present in the JMS Templates.

I think you may be confused. I want to allow front end users to use a separate site as the template and not the master.

Review the tutorial video 13 and 14.
You will see that this is not the master website that is replicated but another slave site used as template.