Hi – I just ran into this error with BP1.2 final and redid the install and the problem went away. The two things I did:
1. If installing on localhost, edit /etc/hosts and add:
and then access the installer using http://bplocal.com
2. After creating a child blog, set the permalink structure to be the same as the root blog. I set them to year/month.
Hopefully this will help.