installing Drupal with Multisite Manager Module in a subfolder

Hello Everyone.

I install drupal in the root's subfolder called main eg. /var/www/html/main. I am making all new sites available at /site/{shortname}/

My problem is getting the Multisite Manager to work. I've spent the whole week trying to make it work to no avail. Drupal itself seem to be working just fine.

Here are some FACTS.
1) I can successfully create a new site with the multisite manager. In my example. A database also gets created.

2) Then I manually create a directory 'site1' under /site/ so it looks like this: /site/site1.

3) When I try accessing it I returns a 403 Forbidden
Forbidden You don't have permission to access /main/site/site1/ on this server. NOTE: it has nothing to do with 'site1' permissions.

CODE FOR APACHE CONFIG:

   <VirtualHost *:80>
    AliasMatch ^/site/\w+/(.*) /var/www/html/main/$1
    DocumentRoot /var/www/html/main/
  </VirtualHost>

CODE IN YOUR ./sites/default/settings.php
### Seetings to Multisite Manager ######

     $requri = explode('/', request_uri());
     if (sizeof($requri) >1 && $requri[1]=='site' && $requri[2] != '') {
       $my_site_base = $requri[2];  
       #this will be the database shared between the main site and the shared sites
       $db_url = 'mysql://username:password@localhost/database';
       $db_prefix = $my_site_base."_";
       $base_url = "http://localhost/main/site/$my_site_base";  // NO trailing slash!
     }

CODE IN .HTACCESS FILE:

# Various rewrite rules.
<IfModule mod_rewrite.c>
  RewriteEngine on 
  RewriteBase /main 

  # Rewrite URLs of the form 'x' to the form 'index.php?q=x'.
  RewriteCond %{REQUEST_FILENAME} !-f
  RewriteCond %{REQUEST_FILENAME} !-d
  RewriteCond %{REQUEST_URI} !=/favicon.ico
  RewriteRule ^(.*)$ index.php?q=$1 [L,QSA]
</IfModule>

Can my problem be the .HTACCESS FILE ABOVE? Please help I am running out of ideas!

IMPORTANT: Drupal and Multisite Manager works without issues at the root level (/var/www/html/). It becomes a problem only when drupal is installed under a subfolder /var/www/html/main. But my employer wants me to move it up to its own subfolder.

Thank you

Cec