WPMU 2.7 Image Upload Not Working

I’ve looked through the forums here and over at WPMU and none of the suggestions are working. When I try to upload an image, the image is uploaded to an ftp directory of /wp-content/blogs.dir/12/files/2009/03/ and thumbnails are created. But the image can’t be viewed in a post or in the media library. The flash uploader always gives an http error after crunching. Browsing to addresses such as sub.domain.tld/files/2009/03/filename.jpg gives a 404 error. Permissions for blogs.dir and all subs are 775. I’m completely lost and the suggestions I’ve found so far just aren’t helping. The only modification I’ve made the the htaccess file is for the supporter/plugins plugin. Thanks in advance.