BuddyPress.org

I have had this issue three times and all the time the only thing that has worked is a new install. That is, wipe clean the wp-admin, wp-content and wp-includes and all files for Mu , rename existing ones to something like wp-admin_old (that’s what I do).

Then:

1. Finish the WP MU installation/upgrade first. Make sure it does work before you go to the next step.
2. Install buddypress plugin first and activate it
3. Reupload the blogs.dir files to the wp-content from your backup manually.

This is guaranteed to work. So far, buddypress doesn’t seem to have any other magic solution to this issue.