WPMU 1.2.1 - First of all, kudos to the developers and community for all your hard work!
When I couldn't import my blogger files via Manage > Import > Blogger no matter what, I remembered reading about importing blogger files another way at one of the multiblog software I was looking at:
and I was able to create the text files for 4 different blogs and was successful in setting up in 4 different WPMU blogs.
The WPMU import of Greymatter files was a breeze for four other blogs. Sweet.
I now move on to solve my template/theme mysteries :-) Many thanks again to all.