EDIT: ignore me, didn't read properly
EDIT2: seems like I'm having one of those days. I'll put my original post back in case anybody is wondering where the overall setting is:
To turn off two-way players league-wide, you need to go into League Settings -> Stats & AI. Under General AI Roster Settings there is a check-box for 'Allow two-way players.'
If this box is checked and you are trying to 'turn off' two-way players on teams you don't control the AI will just make them two-way players again the next day.