A scrollable element within another scrollable element doesn't automatically disqualify a design. The textbox in which I'm typing this is a scrollable element within the scrollable question page on UX.SE, and that's fine. The Facebook ticker (top right) is a scrollable component within the scrollable FB page. Most widget-based webpages display this behavior as well, unless they've turned it into a webapp, like Gmail - where each area is scrollable but the page itself isn't.
But it needs to be carefully designed. It should employ on-demand scroll bars, which help the user know which element is currently attached to the mouse wheel / arrows, and the detailed interaction should be well thought through.
The one case where it's especially difficult is designing for touch screen. Since there is no hover on touch screens, you can't implement on-demand scroll bars, and if you open such a page on an iPad and swipe within the internal element, it won't know which of the elements you meant to scroll.