Hi
I have the same problem. I have installed wpmu, and all seems fine with that.
If I create a new blog, a) I don't receive an email giving login details and b) the subdomain doesn't seem to work.
My DNS records have the * entry (it was done a few days ago so that should have progogated now). My server has mod-rewrite installed, and the blog that I created is listed in wpmu as being there!
The only thing I am wondering is whether the ServerAlias has been setup properly. My server is running Plesk, and it was recommended to me to create a file called vhost.conf in /home/https/$domain.com/conf and put the line in it :
ServerAlias *.domain.com
I created this file in the path /home/httpd/vhosts/selectablog.com/conf and entered the line as above (but with selectablog.com instead of domain.com, as that is my domain)
The server has been restarted since then, but it doesn't seem to have made a difference to me trying to get to my test blog.
Has anyone got any suggestions? I would appreciate any help as I'm a little lost!!
Thanks
James