Man, I hope you get a solution to this. I’ve been struggling for two days to get this same scenario working on my IIS server. What’s frustrating is the whole process *appears* to work – no errors, database tables are updated, welcome email is generated – but the site itself just ain’t there. Grrrrrr!!
Are the new sites set up sub-domains (site1.domain.com, site2.domain.com) or as sub-folders (domain.com/site1, domain.com/site2)?
If the latter, then my understanding is that it SHOULD be creating folders under your WordPress root. If it isn’t, then you’ll get that error. In fact, that’s the error I’m encountering myself, and came here looking for an answer 🙂
