The server logs are kept in your home directory at ~/logs/[your domain]/http and access.log stores web site hits and error.log stores error messages. It's a good idea to make copies of these files if you are in to tracking stats, troubleshooting being hacked, etc because DH only keeps them for a few days.
You probably won't have an error message though, "doesn't move" sounds like you are being redirected back to the login panel. Also its hard to debug rewrite rules unless you have a list of URLs that you want to rewrite.
I'm assuming you install WPMU so that blogs will be subdirectories, right?
Edit: I've tried this myself, installing WPMU to hand blogs on subdirectories instead of subdomains. It install OK and I could login in as the admin first time. Did you install to the document root or to a subdirectory?
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