joshmac/serverdog - Just to be clear about a general BuddyPress point: BP_ENABLE_MULTIBLOG is *not* required to have MU/MS functionality (despite the misleading name). BP_ENABLE_MULTIBLOG's purpose is to allow BuddyPress-content (like member profiles) to be displayed in the context of multiple blogs. BP's default behavior on MS is that all profile links go to a single subdomain, eg example.com/members/boonebgorges. BP_ENABLE_MULTIBLOG enables the existence of example.com/members/boonebgorges and blog1.example.com/members/boonebgorges, etc. I find the whole thing confusing myself, and I recommend that you do NOT enable BP_ENABLE_MULTIBLOG unless you are able to articulate clearly to yourself and others why you need it, and not simply WordPress Network mode/MS :)
Jon - It is likely that your issue is unrelated to the one above, as I think that the 'forbidden' error message is just a generic error message for permissions problems. If you don't have BP_ENABLE_MULTIBLOG enabled, then your problem likely lies elsewhere, in the 3.0.5 upgrade.