Thanks to James Farmer I've had a chance to use a cpanel controlled site.
It looks like cpanel puts an empty .htaccess file into the public_html, and when you attempt to delete the file through the cpanel file manager it only empties it leaving a zero byte file.
Unfortunately, the emptied ".htaccess" belongs to your user, *NOT* the webserver, so the install script can't write to it.
Even renaming the file doesn't work. Cpanel creates an empty .htaccess again! Stupid eh?
So, what to do? You have two choices:
- In your Cpanel filemanager change the permissions of the .htaccess file so that it's world-writeable. Click ".htaccess" -> "Change Permissions" and tick the World::Write checkbox. The Permission fields should read 6 4 6.
- Ftp into your account and delete the empty .htaccess file.
Now install WPMU and it should work.
Cpanel? Give me a shell any day. *grumble*