Thank God, I did it. :)
Here's how I have approached this issue.
When you have a regular (single) Wordpress installation on the root of your site or the main domain of your hosting account, you will receive the "There doesn't seem to be a wp-config.php file." error message when you try to install Wordpress MU on a sub-domain or add-on domain of your site.
Here's how to fix it.
1. Log in to the root directory of your site (where you have also installed the "regular" Wordpress)
2. There is a wp-config.php file in there. Rename it to something else. Something like thisis-wp-config.php or something else, as long as there is no file of similar name in there.
3. While still in the root directory of your site, upload the Wordpress MU zip or tar file.
4. Extract the zipped Wordpress MU package.
5. There should be a new unzipped wordpress-mu folder in the root directory.
6a. Rename the unzipped wordpress-mu folder to the subdomain that you want to install it on. Eg. Rename it to blog, etc.
***If you are not installing Wordpress MU in an addon domain, skip step 6b below***
6b. If you are installing Wordpress MU in an addon domain that you are hosting on the same account. For example, mydomain.com is your main domain (and root directory) and you are hosting myothersite.com on it. You should delete the directory for your addon domain.
For example, if you already have a directory called myothersite.com for that domain appearing in the root directory of the mydomain.com site, you should DELETE the myothersite.com directory.
Now, rename the wordpress-mu to myothersite.com.
7. DO NOT change the permissions on myothersite.com (or the subdirectory where you are installing Wordpress MU, if you are not installing it on an addon domain) to 777
8. CHANGE the permissions on the wp-content folder of myothersite.com to 777.
9. Type in the myothersite.com or subbdirectory where you installed Wordpress MU on.
10. The Wordpress MU installation page should load. Fill in the blanks with your MySQL database info and others and finish the installation.
11. On the next page, copy the temporary password and click on the link to login by typing in "admin" as username and the generated password as your password.
You should be taken to your Wordpress MU admin area.
12. Go back to your root directory and rename the config file that you renamed to wp-config.php and save it.
13. Go to the wp-content folder of your Wordpress MU installation and change the permissions to 755.
Go blow your trumpet. You have just created a phenomenon! Bravo.
I hope this helps.
God Bless! :)
Sincerely,
Muhammad