Media files are copied over to the new blog folder in wp-content/uploads/sites. But the images do not show in the media library only placeholders. The permalink structure appears to be good when compared side by side.
After researching, this may have to do with the new sites not going into the blogs.dir folder. The only thing that has been going in there has been the sitemaps but that hasn't happened the last 5 blogs.
I changed the permalinks structure of the main site to /%postname%/ today but the subsites still show the original structure. The problem was happening before this but thought that it may have added to the problem...not sure.
Thanks for your help - Jan