Does the latest version of the XML Domain Mapping plugin for WPMU work on the subdirectories? I dont really understand how it works so I dont know how to check.
Well, the first thing is that there is no more MU, so anything that you are running is probably updated for 3.0 by now. I don't know which plug in you are talking about...don't you have a link or have you looked that the plug in page to see if it works on subdirectories?