This is my first experience with WP 3.0 MU, but going through the process of enabling MU and creating a network, the whole thing went smoothly in tests and I was able to use TEC fine.
The error you posted occurs in our rewrite-rule code. In enabling MU, I was asked to replace some WP rewrite rules in .htaccess. Is there a chance these were entered incorrectly or skipped in your install? Another possibility is that the plugin was active while creating the network. Where all your plugins deactivated while creating the network?
If the above isn't the problem, did you enable MU at the creation of the blog, or did the blog exist first? Also, are you using MU with sub-domain urls or with sub-directory urls?