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I've managed to create Drupal 6.x multisite installations on my shared hosting account (cPanel). I've done this for different domains (e.g. www.example.com, www.example2.com, etc) as well as subdomains (e.g. site1.example.com, site2.example.com).
Here's a simplified explanation for how I usually achieve this.
Add the domain or subdomain using cPanel (using Addon Domains or Subdomains respectively)
When adding the domain/subdomain I usually choose public_html as a folder. I notice other prefer to create the domain/subdomain folder and then delete it. From my experience either works I just prefer the former option.
Create a folder in the SITES folder.
Rename the folder to the domain name (e.g. www.example.com or site1.example.com).
Copy the default.settings.php file into the folder and rename it to settings.php.
I now want to create a Drupal installation in a subdirectory (e.g. www.example.com/site1). I've found documentation (http://drupal.org/node/278987) on how to achieve this. I've tried it but am unable to achieve this.
I am hosting through IX Webhosting and having an install issue. The datbase is not on localhost. I've tried changing the word localhost to my actual DB server name throughout the code. I've tried commenting out the db_url= line in the settings.php and am still getting the following error:
Failed to connect to your MySQL database server. MySQL reports the following message: Access denied for user 'c317894_einstein'@'98.130.2.53' (using password: YES).