Just thought I would share a solution I found for multi-site sub-directories with godaddy, I found this post and inside is a nice piece of code to replace with your .htaccess
Here's the post:
http://premium.wpmudev.org/forums/topic/already-installed-multisite-w-subdirectories-on-godaddy
and the code:
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteRule ^index\.php$ - [L]
# uploaded ?les
RewriteRule ^([_0-9a-zA-Z-]+/)??les/(.+) wp-includes/ms-?les.php??le=$2 [L]
# add a trailing slash to /wp-admin
RewriteRule ^([_0-9a-zA-Z-]+/)?wp-admin$ $1wp-admin/ [R=301,L]
RewriteCond %{REQUEST_FILENAME} -f [OR]
RewriteCond %{REQUEST_FILENAME} -d
RewriteRule ^ - [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(wp-(content|admin|includes).*) $2 [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(.*\.php)$ $2 [L]
RewriteRule . index.php [L]
</IfModule>:)