I disagree, I didnt expect to have to read upgrade documentation when doing a fresh 1.1 install. The red dialog box in the themes section conflicts what you are saying.
I agree with your post, copying the themes to where you suggest has resolved the issue for me. The instructions in 1.1 are wrong, or at least, they were for me.
I keep trying to select the Buddypress default theme and it says settings saved but the page then reverts back to showing the Network Parent Theme 1.1 as the default one. Is this correct?
