Ben,
I have been having the same issue since the beginning of December. I already had a hosting account with Godaddy and set up a new one good for 3 years just to be able to set up Mult-site with Wordpress. I have not been able to load images to the subdomains --the main account works fine--this is the same issue that is being discussed all through this thread.
During several calls with Godaddy I have not been able to get this resolved--they have gone so far as to tell me they don't offer support for Multi-site installations. Why offer Multi-site if you aren't going to offer support for it? And with all the support techs you have I find it hard to believe (or I did before I experienced it) that none of them know how to successfully set up Multi-site.
I have spent the last 2 WEEKS trying to get this to work. AND THE LAST 3 days looking at other hosting companies. While I was happy with Godaddy why do I need two hosting accounts at a company that I can't run Multi-site on?
What I do want to be able to do is to set up a new subdomain on Multi-site and create a website and then move it to its OWN domain after it is finished and approved. This will involve mapping to the new domain--is there a plugin that will do the re-mapping? Once I move the subdomain to its new domain do I have to install all the plugins that were part of the parent domain?
I don't really want to switch hosting companies, so please tell me how to get Mult-site working on Godaddy. BTW a VIDEO or two on some of these type topics might save a few tech support calls and also lower the frustration of some of us trying to figure out how to do these things.