hwo are u sub it? are u goin to modify>convert polys to subdivisions? thats the way to do it. I wouldn't recomend going to poly> subdivide, doesn't work for what you are trying to accomplish. as far as the grey stuff, try going to edit polygons, normals, go to the options under soften harden, and make sure it is around 30 and hip apply. Let me know how it works out, hope this helps!
Brian