WordPress MU

Fresh install of WPMU, clean database.

Set it to subdomains and added a new blog after install.

Whenever you goto it, it redirects to a 404 page like so.

http://sub.domain.com -> http://domain.com/sub

Then I get the default (domain.com) page with a 404.

I have the ServerAlias set right... (i believe) matching DNS.
ServerAlias *.domain.com
ServerName domain.com

What in the heck am I missing, I've went over everything i could find in the forums. I couldn't find the root of my problem.

ubuntu server,apache,php,mysql,phpmyadmin,webmin

is it that .htaccess doesn't do the redirect right?

anyone?

VICTORY!

Adding a new blog from the admin menu doesn't work.

Using the "new blog" from the main site logged in as admin works perfect.