can’t create pages

Here’s the whole story. have a fresh install of ubuntu server and am logged on to the server. I have run the install script successfully after unzipping wordpress mu to a subfolder. I can get to the admin page but when I create a new blog and click on the link (I’m using subfolders,) I get a 404 error.

I’ve left permissions at 777 on the site for now. I’ve changed the owner and permissions to the webserver in an attempt to fix the issue.

I’ve tried deleting the .htaccess folder and recreating the permalinks. The .htaccess file is never recreated when I do this regardless of the permisssions. I’ve created the file myself, but it always stays empty even after I redo the permalinks.

Any ideas?