When I created my 2nd city, it is now "linked" to my capital.  As you can see from the screenshot, it's name, production and population are all being displayed as my Capitals.  When you click on it it goes to the capitals build / train screen - in effect making it impossible to build / expand this city.

This is 100% reproducable from the save found here:

http://dl.dropbox.com/u/59426113/QuickSave.EleSav

Unfortunately I shut down and restarted FE to see if it was reproducable from the save but forgot to backup the debug.err file 1st.  Sorry!

Screenshot - My main city is "Ahilga" in the left hand side of the screen. Alhain-al-Assan was just settled in the top-right of the screen.