There are several long threads on the forum about this problem, as in http://mu.wordpress.org/forums/topic/296
Most probably it's htaccess interacting with your server setup on the VHost install. I don't know about the non VHost install as I really like the subdomains for user blogs. With htaccess though it's different problems and solutions for different installs. You could try replacing the two rewrite rules in the top blogs section with:
RewriteRule ^([_0-9a-zA-Z-]*)/?files/(.*) /wp-inst/wp-content/blogs/$1/files/$2 [L]
RewriteRule ^([_0-9a-zA-Z-]*)/?wp-content/blogs/(.*)/files/(.*) /wp-inst/wp-content/blogs/$1/files/$3 [L]
Works for some but didn't for me. Beware caching delays and if it doesn't work you could then rename blogs in wp-content to blogs.php which finally worked for me but not for others, and the developer advises against it.
Then again, next time you update from the nightly build it might all be fixed/broken again ... or not. We're all pre-alpha bug testers here :)