I created a new multi-site instance. The blog is working. I created a new sub-domain blog and that is working. I can us admin fine. I can add new posts.
However permalinks are not working to individual posts or pages on the blogs. If I go to old style (ugly) permalinks then you can view posts but that is the only way.
I imagine this has to be a .htaccess issue but I have used the code provided in the instructions. I have tried various modifications to see if I could make it work, but nothing works.
The install is a VPS with Ubuntu.
Any suggestions would be appreciated. Are there any full .htaccess examples I can try. This was a brand new VPS with brand new install of multisite WordPress.