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After finally figuring out the symlinks, etc, I decided to install drupal 6.1 with a shared DB (my goal is to have six web sites with different content, but the same themes/modules).
Prior to the installation, I modified the default.settings.php file to set up the following prefix:
It seems that the default file system path recommended by Drupal is ./sites/default/files. Honestly this doesn't seem like that great of a location to me and the images I want to store on my site.