Actually, this is what I was getting at:
http://mu.wordpress.org/forums/topic.php?id=5831&page&replies=5
Dr Mike, are you saying that my pre-existing subdomain (http://300.mpm.org.au) could be interfering with my WPMU creating new subdomains?
I'm still having issues with subdomains not resolving although my host says they should work:
"Hi Michael,
I have been looking over this for the past few days and it just seems that the sub domains is the only issue I see at the moment. You should be able to setup WPMU and function correctly on mpm.org.au without a problem."
How long is it meant to take for a subdomain to show up? How long after my host enables the wildcard should I be able to create subdomains?
BTW I've been searching through these forums for a week or so now and I can't help but wonder why you don't at least have the Read Me file as a sticky topic or a specific post for subdomains. I realise that's what Tags are for but it seems to be a pretty popular topic!