I have this same problem – I know WPMU is sending me emails for other things, but BuddyPress related items do not get sent.
On new user registration, the final part of the registration process says “You have successfully created your account! To begin using this site you will need to activate your account via the email we have just sent to your address.”
No email sent to either new user or admin, and new user isn’t in list of users in admin panel.
in all my test installs of 1.2 on wp and wpmu I’ve never had an activation email for new user signups – I just assumed the feature was removed…it’s still there?
are you going from wpmu to wpmu? I’m having problems doing something similar, but moving from wpmu to wp, AND a different domain name. I’d love to figure out why it’s not working, and I’m even willing to stay with wpmu, but so far, everything I’ve tried has resulted in failure.