Sorry for the delay. I had to teach 3 courses.
Thanks for your suggestions thus far. Twenty ten theme is set by default on the main site as well as the subdirectory sites. I don't believe themes are the issue.
Please keep in mind that the visiting the new subdirectory site or even trying the subsite backend results in a "file not found" 404 error page.
When creating new sub sites it creates the entry on the database table and sends out e-mails to confirm set up, but NO access to the page.
I believe it is a config issue, since I have duplicated this on 3 different test sites.
I tried to view error logs and either have none or can't find them. I edited the wp-config file.
define( 'WP_ALLOW_MULTISITE', true);
define( 'MULTISITE', true );
define( 'SUBDOMAIN_INSTALL', false );
$base = '/staff/';
define( 'DOMAIN_CURRENT_SITE', 'www.<em>domainname</em>' );
define( 'PATH_CURRENT_SITE', '/staff/' );
define( 'SITE_ID_CURRENT_SITE', 1 );
define( 'BLOG-ID_CURRENT_SITE', 1 );
not sure if the first 4 lines are correct, but no errors on main page, admin page, or in the debug.log file that I created in the wp-content folder with 666 rights.
Thanks for all your thoughts and suggestions. My kids are eagerly waiting on solving this issue. Thanks for promoting their education too.