Nelo in sub.sub.domain.edu - can't create a new blog in sub.sub.sub.domain.edu

Hi everyone -

I just installed WPMU 2.65 on my server (in a large organization). The WPMU was installed in the root of

sub.sub.domain.edu

and appears to function fine (with Nelo front page) EXCEPT, when I tried creating a blog named "case" WPMU thinks it created a blog accessible at:

case.sub.sub.domain.edu

however http://case.sub.sub.domain.edu is not accessible in the browser.

WPMU is running in plain CentOS on Apache2.

What should I do? Is there a plugin addressing this? or some code I need to change somewhere?

I suspect it is probably not Nelo's fault, but I don't even know where to start troubleshooting this - any advice is appreciated.

Victor