I'm just submitting this in case it helps some folks that find themselves in the same position I was in.
I'm not asking for assistance or support...I just wanted to let you know what my problems were and how they were resolved.
Host: TMD Hosting (They've been fantastic by the way
Server Account Type and Specs: Reseller Account with WHM and CPanel (Version 11.25.0-STABLE) Admin.
Server OS - Linux
Apache - Version 1.3.41
PHP - Version 5.2.10
MySQL - Version 5.0.89-community-log
IP Address - Shared
WPMU Install Specs:
Version - 2.9.2
Root Folder Installation
Installed Plugins - See Image Below:
Databases - Using MultiDB have configure 265 Databases
Site is set to use Subdomains for Adding New Blogs
BuddyPress Install Specs:
Version - 1.2.3
Theme - BP Scholar Version 2.1.6
Issue 1: WPMU would not create new blog
Note: My site is configured so that the Admin has to Add New Blogs
Symptoms: As far a WPMU was concerned everything seemed to be working just fine. Emails were sent out, Databases were all correct etc. For all intents and purposes the new blog was successfully created. The problem was when I went to 'Visit' the new Blog, I got 'Internal Server Error'.
Troubleshooting: I spent 3 days scouring the Planet, starting here of course (thanks to all contributors), and visiting Andrea's excellent Tutorials, Matt Mullenweg's site (thanks Matt) and on and on.
Naturally, I followed/explored all the advice and every possible option I could. e.g. .htaccess, wildcards etc, etc..including setting up subdomains via Cpanel prior to 'Adding New Blog'.
Solution: One of the fine chaps at TMD Hosting found the solution. This is what he said:
"The issue you have experienced has been caused by the fact that the subdomain http://blog.domain.com/ was created via the cpanel -> subdomains section. Be advised that if you would like to use any subdomain with your wordpress mu it should not be created via the cPanel as the * wildcard record will handle it for the wordpress mu. Only if you are using the subdomain for another website or script it should be created to exclude it from the * record. I have removed the subdomain and the page is properly accessible now:"
Issue 2: 404 Page Not Found:
Having got to the blog, the next thing was when I clicked on the title of the blog in the category list, it returned the '404 Error'.
Solution: I'm not sure exactly which one did it, but I did all of the following:
I then found (and remembered...doh!...because this also works on single WordPress installs), a comment by member 'kernel_panic' on this thread.
I resaved my Permalinks. Don't change them, just open the Permalinks page and click 'Save'.
Note: If, like my site, your Permalink link has gone from you Admin>Settings menu (as I recall one of the plugins removes it...I forget which one), just enter your variation of the following URL into your browser - 'http://(subdomain of you have one). domain.tld/wp-admin/options-permalink.php' and it should show-up.
Ok! That's it...I hope it helps someone...I was tearing what's left of my hair out there for a while. It would appear that these circumstances and at least one of the solutions was particular to my Host Server...it doesn't mean that mine is the only one however. Good luck