I have a multisite setup on site.com, and a test site at site.com/test.
The larger storage is mounted on /wikis, and each site has a directory under it for files.
Drupal file system path is set to /wikis/test
Downlaod method is private.
Default image path is images
/wikis/test/images exists and has the files I've uploaded in it, plus generated thumbnails.
Image nodes created with image assist work, both thumbnails and originals.
They present the correct tag:
img src="https://site.com/test/system/files/images/chair.thumbnail.jpg"
When tags are inserted with the image assist module or generated from filter tags, they are like this:
img src="/test//wikis/test/images/chair.jpg"
I don't know if I did something very wrong or if there is a problem with the module, but I don't see that the internal filesystem path of /wikis/test should ever appear in a url. replacing "/wikis/test" with "system/files" seems to make things work.
This is drupal 5.3
image/image attach 5.x-1.6
image assist 5.x-1.5