BuddyPress.org

have you got firebug? the way i had to try to solve the issue was painful, making one change at a time, but if you inspect the area around where the alt text is appearing you can see the paths where stuff is referring to.

for you i’m pretty sure that it is just a matter to change the path to the correct location. i.e. with MU is wp-content/blogs.dir/1/files, for the standalone it should be under miscellaneous settings and i had the full path to the upload folder (people normally keep it outside the WP installation) and the full url is blank for me.

i had to change the htaccess file because the rewrite gave me issues with the slash ‘/’. if i had it at the start it would duplicate it (i.e. mysite.com//wp-content/blogs.dir/1/files) and if i left it out it would modify the path completely (i.e mysite.com/blogs.dir/1/files). it seems that the upload worked in the second instance, but then the reference to the files is not displaying, whilst the first is breaking the upload as well.
hope this helps you, there is another thread discussing similar issues (https://buddypress.org/community/groups/miscellaneous/forum/topic/buddypress-and-wordpress-30/#post-48806)