setup Multisite, all working except images are not showing on the main site

I tried setup the multi site as following:

1) Created a subdomain "store" and point the subdomain to the main domain's document root
2) Create a folder in sites directory; store.maindomain.us
3) Created a new database, new user for the subdomain site
4) Copy settings.php to the 2nd step folder and update to point to the new database
5) went to store.maindomain.us/install.php and installed drupal
6) Created another for maindomain.us in sites folder
7) moved maindomain.us specific modules to step (6) folder
6) Updated settings.php as following for sharing the users, etc.,
$db_prefix = array(
'default' => '',
'authmap' => 'domain_shared.',
'role' => 'domain_shared.',
'sessions' => 'domain_shared.',
'users' => 'domain_shared.',
'users_roles' => 'domain_shared.',
);
7) Clear the cache

This is now working great without any problems. Now, when I tried to add a new page with some pictures on the main domain... all the existing pictures stopped showing. It is working when I delete /files

I tried the following, but no use
1) I moved default/files to /files
2) Give all permissions 777 to files folder

I have the following settings:
1) admin/settings/file-system: sites/{main_domain}/files
2) Images module default image path: images
the physical images are there in the above folder, but not picking up.

Any help? TIA.

Edit: I noticed it is looking for images at
http://{domain}/sites/{domain}/files/sites/default/files/img_1.jpg

instead of

http://{domain}/sites/{domain}/files/img_1.jpg

not sure how to fix it.