WordPress MU

I think I have an issue with .htaccess file but not certain. I have upgraded MU from 1.2.1 to 1.3.3 and some blogs will display and some with a blank page. I then tested by removing the .htaccess file and ALL the blogs display the error message of:

Not Found
The requested URL /blogs/assembly08/ was not found on this server.

Here's the .htaccess file, which I did not edit and not certain if this file is needed?

RewriteEngine On
RewriteBase /blogs/

# Rewrite http://www.domain.com to domain.com
RewriteCond %{HTTP_HOST} ^www\.(.*)
RewriteRule ^(.*) http://%1/$1 [R,L]

#uploaded files
RewriteRule ^(.*)?/?files/(.*) wp-content/blogs.php?file=$2 [L]

RewriteCond %{REQUEST_FILENAME} -f [OR]
RewriteCond %{REQUEST_FILENAME} -d
RewriteRule . - [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(wp-.*) $2 [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(.*\.php)$ $2 [L]
RewriteRule . index.php [L]

Note: I have removed the "mu-plugins" from the wp-content after the upgrade (as was suggested) and thought this was the problem but I don't think it is.

Any ideas/clues where I might need to troubleshoot? Thank you for your help.

Put the htaccess back, that;s not the issue.

Did you run the upgrade link in the Site admin menu?

Yes I did (disabled plugins before upgrade, etc.). I followed the instructions for upgrade at:

http://codex.wordpress.org/Upgrading_WPMU

I believed I solved my issue. There was a "plugins" directory in wp-content which some plugins caused the pages to go blank. After searching I found the below link that proves to be useful:

http://wordpress.org/support/topic/118278?replies=11#post-561936