Read carefully what the clause in Uses Not Permitted says: "(1) In Type I or II construction
unless permitted to be Types III, IV, or V construction." (Emphasis added.)
So to answer the question of why you can use NM in a wooden building, but not in a building built from things that don't burn, is this: When the building is required to built from highly fire-resistive materials, you cannot use NM. If the building is not
required to be highly fire-resistive (even though it may be built from fire-resistive materials), then (in many cases) NM is OK. The idea is that there is a hierarchy of how critical a building is, and critical buildings must be built so they won't burn down, and so that the electrical system is as safe as practical.
(I note that it appears that our homes, our bedrooms, are in the "let the danged thing catch fire and burn down" category
. )
[This message has been edited by SolarPowered (edited 05-17-2006).]