Multisite network not working

Three things here.

1) Your .htaccess

You should have WordPress on the bottom, so it should look like this:

# BEGIN wtwp_cache
<IfModule mod_mime.c>

	# Text
	AddType text/css .css
	AddType application/x-javascript .js
	AddType text/html .html .htm
	AddType text/richtext .rtf .rtx
	AddType text/plain .txt
	AddType text/xml .xml

	# Image
	AddType image/gif .gif
	AddType image/x-icon .ico
	AddType image/jpeg .jpg .jpeg .jpe
	AddType image/png .png
	AddType image/svg+xml .svg .svgz

	# Video
	AddType video/asf .asf .asx .wax .wmv .wmx
	AddType video/avi .avi
	AddType video/quicktime .mov .qt
	AddType video/mp4 .mp4 .m4v
	AddType video/mpeg .mpeg .mpg .mpe

	# PDF
	AddType application/pdf .pdf

	# Flash
	AddType application/x-shockwave-flash .swf

	# Font
	AddType application/x-font-ttf .ttf .ttc
	AddType application/vnd.ms-fontobject .eot
	AddType application/x-font-otf .otf

	# Audio
	AddType audio/mpeg .mp3 .m4a
	AddType audio/ogg .ogg
	AddType audio/wav .wav
	AddType audio/wma .wma

	# Zip/Tar
	AddType application/x-tar .tar
	AddType application/x-gzip .gz .gzip
	AddType application/zip .zip
</IfModule>

<IfModule mod_expires.c>
	ExpiresActive On

	# Text
	ExpiresByType text/css A31536000
	ExpiresByType application/x-javascript A31536000
	ExpiresByType text/html A3600
	ExpiresByType text/richtext A3600
	ExpiresByType text/plain A3600
	ExpiresByType text/xml A3600

	# Image
	ExpiresByType image/gif A31536000
	ExpiresByType image/x-icon A31536000
	ExpiresByType image/jpeg A31536000
	ExpiresByType image/png A31536000
	ExpiresByType image/svg+xml A31536000

	# Video
	ExpiresByType video/asf A31536000
	ExpiresByType video/avi A31536000
	ExpiresByType video/quicktime A31536000
	ExpiresByType video/mp4 A31536000
	ExpiresByType video/mpeg A31536000

	# PDF
	ExpiresByType application/pdf A31536000

	# Flash
	ExpiresByType application/x-shockwave-flash A31536000

	# Font
	ExpiresByType application/x-font-ttf A31536000
	ExpiresByType application/vnd.ms-fontobject A31536000
	ExpiresByType application/x-font-otf A31536000

	# Audio
	ExpiresByType audio/mpeg A31536000
	ExpiresByType audio/ogg A31536000
	ExpiresByType audio/wav A31536000
	ExpiresByType audio/wma A31536000

	# Zip/Tar
	ExpiresByType application/x-tar A31536000
	ExpiresByType application/x-gzip A31536000
	ExpiresByType application/zip A31536000
</IfModule>
<FilesMatch "\.(?i:css|js|htm|html|rtf|rtx|txt|xml|gif|ico|jpg|jpeg|jpe|png|svg|svgz|asf|asx|wax|wmv|wmx|avi|mov|qt|mp4|m4v|mpeg|mpg|mpe|pdf|swf|ttf|ttc|eot|otf|mp3|m4a|ogg|wav|wma|tar|gz|gzip|zip)$">
	<IfModule mod_headers.c>
		Header set Pragma "public"
		Header append Cache-Control "public, must-revalidate, proxy-revalidate"
		Header unset ETag
	</IfModule>
</FilesMatch>
<FilesMatch "\.(?i:css|js|gif|ico|jpg|jpeg|jpe|png|pdf|swf|ttf|ttc|eot|otf)$">
    <IfModule mod_headers.c>
		Header unset Set-Cookie
	</IfModule>
</FilesMatch>
# END wtwp_cache

# BEGIN wtwp_security
<IfModule mod_rewrite.c>
	RewriteEngine On
	RewriteBase /
	RewriteRule ^wp-admin/includes/ - [F,L]
	RewriteRule !^wp-includes/ - [S=3]
	RewriteRule ^wp-includes/[^/]+\.php$ - [F,L]
	RewriteRule ^wp-includes/js/tinymce/langs/.+\.php - [F,L]
	RewriteRule ^wp-includes/theme-compat/ - [F,L]
</IfModule>
<Files "wp-config.php">
	Order allow,deny
	Deny from all
</Files>
Options -Indexes
# END wtwp_security

# BEGIN WordPress
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
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 ^wp-admin$ wp-admin/ [R=301,L]

RewriteCond %{REQUEST_FILENAME} -f [OR]
RewriteCond %{REQUEST_FILENAME} -d
RewriteRule ^ - [L]
RewriteRule ^(wp-(content|admin|includes).*) $1 [L]
RewriteRule ^(.*\.php)$ $1 [L]
RewriteRule . index.php [L]

</IfModule>

# END WordPress

2) The ‘missing’ folders:

however, when I go back to my FTP client, there is nothing in the folder in question

The folders are virtual, and if you have them, then you should delete them. 🙂 It’s just like how you don’t have actual pages for your blog posts. The whole thing is virtual 🙂

3) So why aren’t the subdomains working?

it gives me an error when I try to visit the subdomain

What’s the error?

How did you setup your subdomains on your webhost?

According to Godaddy, their hosted accounts are not fully compatible with WordPress Multisite.

That’s not what they meant.

http://support.godaddy.com/help/article/6143/enabling-wordpress-multisites

NOTE: You cannot use the WordPress Subdomains option with our shared hosting if you are planning on using wildcard subdomains.

Which is inaccurate. They mean they don’t support wildcard subdomains, not that they don’t support using Subdomains. You will have to manually create each Subdomain one at a time, and point it to where filebooks.com is installed.

How do you do that? Read this: http://support.godaddy.com/help/article/4652/managing-your-hosting-account-subdomains

This part is what you need to pay attention to:

Select whether the subdomain content will reside in a folder of the same name or a new or existing folder.

You want it to reside in the same folder that filebooks.com is in.

More I cannot say, as I neither use nor work for them.