Site breaks after activating privacy

Hello All,

After activating Multisite privacy in a Network and then at the site level selecting "Only registered users of this blogs can have access" and the visiting the site I am prompted to login (as expected) and I can log and get the home page however the site is broken. None of the site's links work, they all return:The requested URL /groups/ was not found on this server.

Ouch!

Setting privacy back to open does not fix the problem. This is not a production site so this is not the big a deal, but I would like to fine out why! and fix it.

I tested this on two site in two different networks, same result.

~eric