BuddyPress.org

Virtual multiblog is in a way like MU, but different; MU shares the userbase, themes and plugins, while VMU treats each install totally separate.

The reason why BP doesn’t really work with VMU is BP requires pretty permalinks and alterations to the .htaccess file; VMU doesn’t like plugins that try to modify the .htaccess file.

You might be able to get away with the following tip about custom permalinks in VMU on different VMU blogs:
http://striderweb.com/wp-content/multiblog/multiblog-readme.htm#permalinks