I did my initial testing with WPMU and everything worked fine then. So then I removed everything, cleared out the database and did a fresh upload and install. Everything installed and activated fine.
When a user goes to wp-signup.php to create a new user and blog, it says it is created and needs to be activated, email sent. The email never comes. I've read that some people have issues with hotmail so I tried two other emails that aren't hotmail and they didn't receive it either. If I got into the Site Admin, I don't see the blogs there or the users at all. If I try to recreate them it says the username and/or email is in use already. I've checked the SQL database and the users and blogs aren't listed there either.
I tried another fresh install in a different directory and database. Everything installed fine with not issues. I'm still having the same problem.
Any ideas on what is going on? The first test worked fine, but now I can't get it to work on new installs.