I seem to remember from a long time ago that if you create a new
directory under a directory that has the sgid bit set, the new
subdirectory will inherit the group and permissions of its
parent. However, this doesn't seem to be the case. What am I
misremembering?

(I need this so that new directories created in a CVS repository will
all be in the same group and have group write permission set so that
other users will be able to commit to the new directory.) I'm sure I
had this working once a long time ago, but perhaps that was on a
Solaris machine, and I've been the sole user of my CVS repository (on
NetBSD) for a couple years now.