So I was having the problem with this on the single blog version of wordpress but not the multi user version on the same server. Then on the same server I created a brand new install of wordpress and buddypress and got it working there. I eventually found that the upload path that worked had /var/www/vhosts/url/httpdocs/wp-content/uploads but the one that did not work had just wp-content/uploads. once i changed this everything worked.
I am having the same problem as nuprn1. no slash at the beginning. Now I’m building off of a single WP installation (not WPMU) as 1.2 (trunk) is supposed to support this.
