WordPress MU

When a user registers for a blog, the blog makes it self a sub domain or something like that!

Here is an example: my website is gravy.libertycrd.com
I used a test account named test1
The activation link is:

http://test1.gravy.libertycrd.com/wp-activate.php?key=6a2d40e586ad72d8

I was wondering is there a way to make the user names blog in a format such as: gravy.libertycrd.com/test1

When the link is clicked I get this error,

Oops! This link appears broken.
DNS error - cannot find server.

Please I need help!
Thanks

You installed in SubDomain mode and you're getting that error because you didnt follow all the steps in the readme.

If you want to make the user blog name like that, then you will need to delete everything and install fresh. This time select SubDirectory.