BuddyPress.org

You should ask this question in the Alpha/Beta forum https://wordpress.org/support/forum/12

@Andrea_r has posted relevant info about setting up a Network in WP 3.0
https://codex.wordpress.org/Create_A_Network
Note : Subdomains work by using wildcard subdomains. You must have this enabled in Apache, and you must also add a wildcard subdomain to your DNS records. Some hosts will not support this, so you may need to ask your webhost before enabling this feature.
Which means you do not and should not add the subdomain physically to your server. The subdomains generated by WPMU and WP 3.0 are virtual subdomains.