I am having the same problem. I cannot add blogs from the admin panel though I can from /blogs/create. I tried creating blogs without BuddyPress installed and it worked so it doesn’t seem to be a WPMU problem. I tried with an earlier version of buddypress and it worked as well so it seems to be something with buddypress 1.2. It looks like the problem is that it isn’t correctly adding the blog tables to the database.