It looks like you're confusing which software you're interacting with here. So, let me see if I can clear up some things for you, and I think once you understand how these pieces fit together you'll be able to get your settings right and the behavior you want.
Usermin is a completely separate program, running on a different port. A Webmin user is, in no way, effected by what you do with the Usermin configuration. Webmin users are not Usermin users (though either could be a system user, and one user could have both Webmin and Usermin access). So, to be clear: If you are wanting to limit a Webmin user, you do not do it in the Usermin Configuration module (that's for Usermin users). You do it in the Webmin Users module.
So, at this point, you may be asking, "Well how do I configure permissions for a Webmin user?"
Browse to Webmin->Webmin Users and then click on the username of the user you want to edit.
Then, open up the Available Webmin Modules section.
Click on "File Manager" in the Others category (or Filemin File Manager, if you've installed the third party version on github, though I think we can't recommend that one at the moment, as it has gone in a weird direction lately, and seems to not interact very nicely with Webmin current versions).
Now you can choose how to restrict this user's use of this module. The options are quite fine-grained, and most are pretty intuitive, I think.
To limit the user to a specific directory, you can fill in the "Allow access to directories" field with the directories you want available.
To have Webmin perform the file actions as the user, rather than as root, you can edit the "Access files as Unix user" option and set it to "Save as Webmin login".
In short: Forget about Usermin. It isn't related to what you're trying to do. Also, it doesn't sound like Virtualmin is in the picture at all (though for web hosting related tasks, you probably should be using Virtualmin rather than just Webmin by itself, and it does create website owner user accounts with the kind of permissions you're talking about, by default and without any extra hoop jumping required).
On this question:
On a side note, I've played around with some of the basic options, and
noticed that Webmin doesn't save what I changed sometimes. It'll
default it back to the root directory and change the browsing files
back to root. Other times it does. I want to say maybe there's a
permissions or access issue or something? Either way, no change once I
log in to check. Ideas?
You're going to have to be more specific. That is not an issue we've heard about (and we'd probably hear about it pretty quick). Which options? Where are you configuring the thing that you don't think is saving? What makes you believe it isn't saving?
Anyway, I kinda suspect that the problems are all related to just not knowing how all the pieces fit together and what is doing what.
Here's a quick description of the three projects you've mentioned:
Webmin - General purpose web-based systems management UI for Linux and UNIX systems. It is like a GUI version of ssh; it is intended for systems management tasks, and is not usually an end-user tool, though there can be some overlap of tasks that are useful to delegate (and Webmin has fine-grained access controls in a lot of modules to make that possible). A Webmin user can have privileges beyond what the user has at the command line, up to and including root-level privileges.
Usermin - Webmail and more. It is not an administrative tool at all, and runs as the user that is logged in, and only with their privileges. A Usermin user cannot be granted more access than they have on the command line, because it drops privileges and literally runs as that user. It does not run inside of Webmin, and is a wholly separate program that runs on a different port and uses different/separate user accounts.
Virtualmin - A web hosting control panel (runs inside of Webmin, and uses ACLs and other features of Webmin, and a Virtualmin user is a special type of Webmin user). It does things like automate the creation of Apache VirtualHosts, databases, mailboxes, BIND name records, configuration of spam/AV scanning, etc. It's a handful of Webmin modules, and a bit of extra configuration on the system, designed to make web hosting with many accounts and many websites easier. Virtualmin users have some administrative privileges via Webmin ACLs, but they are not "root" level users.
Disclaimer: I work on Webmin, Virtualmin, and Usermin.