I have just had my domain setup on the Linux server.
I want to add a domain to my account. I have 9 add on's available on the CPanel, but when I try to add another it keeps on making it a subdomain instead.
Also, how do you create a subdomain dns entry that points to an ip address?

Addon domain is an alias for subdomain so it's ok.

Ok, the other question here that I was asking was, How do you create a subdomain that points to another IP. For example, I have a server at home that I do a bunch of testing on and I want one of my subdomains to point to its ip address instead of routing to a different folder in my webspace. How would I do this?

We'll be able to do this if you you'll use our name servers.
You'll just need to ask us to do this.