MU Subdomain Installation Woes

I’m trying to get WordPress MU running using subdomains, but am having a bit of trouble.

I installed the files in a directory one down from the web-root called “/blogs/”. I then access the newly created using blogname.domain.com

In my httpd.conf I added a directive for “*.domain.com” and have it pointing to “/home/account/public_html/blogs” as the site root.

I can access the first page of the new blog by going to the subdomain address, however if I click on any of the links I get a internal server error. A closer look at the logs produces this:

“mod_rewrite: maximum number of internal redirects reached. Assuming configuration error. Use ‘RewriteOptions MaxRedirects’ to increase the limit if neccessary.”

So it seems that there is a rewrite issue causing a loop perhaps.

Has anyone encountered this and fixed it? Or has anyone ever setup a MU install like this that can point me to what I may have done wrong? All I want is the files to not be installed in the webroot, and use subdomains.

Thanks!
PC