I am having the same issue. Both on the front end and in the admin area. Any of these links simply take me to the homepage of the blog.
WordPress MU 2.8.6
installed in a sub directory
a fresh install
wordpress MU is functioning as normal before and after buddypress install
Buddypress Version 1.2.1
Did not upgrade buddypress
No other plugins installed
Using Buddymatic theme with a custom child theme, (though switching back to buddymatic default, coffe with friends or kubrick hasthe same issues)
No modification of core files
No custom functions in bp-custom.php
Not running bbPress (yet, one thing at a time
I have no server error logs afaik, but i do get this error when activating the plugin*
The blog is currently hosted inhouse on a development server, I could request permission to reveal more details about this if requiered
Plugin could not be activated because it triggered a fatal error.
Fatal error: Cannot redeclare bp_loaded() (previously declared in /home/astateofwriting/wordpress-mu/wp-content/plugins/buddypress/bp-loader.php:54) in /home/astateofwriting/wordpress-mu/wp-content/plugins/buddypress/bp-loader.php on line 55
@corin-rules BuddyPress 1.2.x requires at least “Requires at least: WordPress 2.9.1″ (regular or normal). This may or may not have anything to do with your problem, though you will find other problems running it on 2.8.