Broken images and hyperlinks

I am trying to setup WordPress MU 3.1 on uniserver.
I believe that I have the sub-directory install correct.
My main site is: http://wordpress/wp
I created a second site http://wordpress/wp/mysite

My main page displays nicely. However the other sites, it looks like the template doesn’t apply. It is just plain text.
Sometimes when I click on a link it takes me to another page (no graphics)
Sometimes I get a 500 Internal Server Error

Htaccess:
#——————————————————————————
# Server root folder www .htaccess
# This file provides server security limiting access to the localhost only.
# Comment next three lines to deactivate. (Allows external access)
#——————————————————————————

#Order Deny,Allow
#Deny from all
#Allow from 127.0.0.1

#——————————————————————————
# To allow execution of cgi scripts in this directory uncomment next two lines.
#——————————————————————————

AddHandler cgi-script .pl .cgi
Options +ExecCGI +FollowSymLinks

#——————————————————————————
# Activate this section to use the Private Server Feature!
# Defaults: Username – root; Password – root
# Note AuthUserFile: File path is relative to server root
# To lock server, uncomment the next 4 lines. (A name and password is required)
#——————————————————————————

#AuthName “Uniform Server – Server Access”
#AuthType Basic
#AuthUserFile ../../../htpasswd/www/.htpasswd
#Require valid-user

#redirect to www for the main site
RewriteCond %{HTTP_HOST} ^somedomain\.com
RewriteRule ^ http://wordpress.somedomain.com%{REQUEST_URI} [L,R=301]

# BEGIN WordPress

RewriteEngine On
RewriteBase /wp/
RewriteRule ^index\.php$ – [L]

# uploaded files
RewriteRule ^([_0-9a-zA-Z-]+/)?files/(.+) wp-includes/ms-files.php?file=$2 [L]

# add a trailing slash to /wp-admin
RewriteRule ^([_0-9a-zA-Z-]+/)?wp-admin$ $1wp-admin/ [R=301,L]

RewriteCond %{REQUEST_FILENAME} -f [OR]
RewriteCond %{REQUEST_FILENAME} -d
RewriteRule ^ – [L]
RewriteRule ^[_0-9a-zA-Z-]+/(wp-(content|admin|includes).*) $1 [L]
RewriteRule ^[_0-9a-zA-Z-]+/(.*\.php)$ $1 [L]
RewriteRule . index.php [L]