Can you help me with permalinks it Multisite?

Hi I am having an issue with a new Multi Site install. I have had a blog for a while at http://garethsworld.com. Today we made it multisite but a couple of things are happening.

1. I can change permalinks for the default site so they dont have index.php
2. my site has not been moved to gareths world.com/blog and does not include this in the link
3. Everything seems to work fine for subsites. e,g http://garethsworld.com/testsubsite/hello-world/

Is this a config issue or a rewrite issue? Unfortunatly life is not so simple for me as my server is on nginx. Can you please help?