WordPress 3 Networks activation causing permalinks problem

After upgrading to version 3.0, I followed the instructions to enable multiple sites (the network). After enabling the network, my permalinks were broken. I had the permalinks originally set to the default (ex: https://www.smallandsimplethings.org/blog/?p=1249 ). During enabling of the network, my permalink structure was switched to ‘Day and name’:

https://www.smallandsimplethings.org/blog/blog/2010/06/18/sample-post/

Changing this setting back to the default fixed this problem.

But now, when I try to use the network feature by setting up a new site/blog I get a blog that is completely broken. I made the name of the blog ‘Manhattan’. For the url, it gives me:

https://www.smallandsimplethings.orgsnstmanhattan which, no surprise, doesn’t work.

Any guesses as to what I’ve done wrong?