How to install Wordpress MU ?

Open up .htaccess and remove/comment out the RewriteBase line and also add a slash to the wp-admin redirect target rule. This will allow the .htaccess to function correctly from any path, rather than just from /blogs/.
RewriteEngine On
# RewriteBase /blog/
 
#uploaded files
RewriteRule ^(.*/)?files/$ index.php [L]
RewriteCond %{REQUEST_URI} !.*wp-content/plugins.*
RewriteRule ^(.*/)?files/(.*) wp-content/blogs.php?file=$2 [L]