Finally got a fully working install. Had to edit the table entries manually (see post from 2006-07-03 12:55:39) and use this in the .htaccess:
RewriteEngine On
RewriteBase /
# Add trailing slash on directory request
RewriteCond %{REQUEST_FILENAME} -d
RewriteRule ^/home/myaccount/public_html/(.*[^/])$ $1/ [R,L]
# Remove 'www.' if present
RewriteCond %{HTTP_HOST} ^www\.(.*)
RewriteRule ^(.+) http://example.com/blog/$1 [R,L]
#uploaded files
RewriteRule ^(.*)?/?files/(.*) blog/wp-content/blogs.php?file=$2 [L]
RewriteCond %{REQUEST_FILENAME} -f [OR]
RewriteCond %{REQUEST_FILENAME} -d
RewriteRule . - [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(wp-.*) blog/$2 [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(.*\.php)$ blog/$2 [L]
RewriteRule . blog/index.php [L]