Hey Brian, I have the same question.

Have you looked at the white paper on Portal Template ? Modules are discussed on page 13. However, i think that these elements control the way a moduled is displayed on a tab/page. Not which modulesin a child portal  will be available to place on a page

The modules permission element  seems to control the users who are allowed to view or edit the module.  Mr. Walker doesn't  give an 'example' or 'type' for this element, so it is a little confusing how it works. 

What we are looking for is a togle for each module that will include/disclude it form the module list at the Admin level.

I've searched this forum quite a lot, but nothing yet address this issue.

So far,  I see two work arounds for this issue:

Create a second installation of DNN and install only the modules that you want to disclose in the Child.

Disable the dropdown box that list the modules in the admin view:  edit the code to test for admin,  if admin, then listbox is not available.

i hope I'm wrong, but that seems to be it.

David