wp_insert_term issue

Hi all, I’ve been pulling my hair out for two weeks on this one, any help would be really appreciated.

I’m using WP multisite 3.2.

On the site front end I have a tool that uses wp_insert_term to add a new category to any one of the mutlisite blogs (Im using switch_to_blog() in case that matters).

I’m then calling wp_set_object_terms() to add a post to the new category created.

Both these work fine, the new category gets created and the post gets switched to that category.

The Problem:

The permalink for the post in the new category throws a 404 error.
The post does not get added to the Post Count for the new category.

Both these problems can be resolved by:

A) Go to wp-admin -> settings -> permalinks and save permalinks
B) Go to wp-admin -> posts -> categories -> and add any other category

The above two solutions won’t work for me as I can’t manually do this everytime a user uses the tool we built.

What we have tried:

function flush_permalinks() {
global $wp_rewrite;
$wp_rewrite->set_permalink_structure(‘/%postname%/’);
}
add_action(‘init’, ‘flush_permalinks’);
// This does not solve it

We have also tried:

function flush_permalinks() {
global $wp_rewrite;
$wp_rewrite->flush_rules();
}
add_action(‘init’, ‘flush_permalinks’);
// This does not solve it

And we have tried:

add_action( ‘init’, ‘create_initial_taxonomies’, 0 );

//This does not solve it.

Thanks in advance for any help or pointing us in the right direction for a solution!