Incompatible with Imageapi/Imageache module

Hi There, I am pretty confused, My multisite manager seems to be working great and although it was a nightmare to get the htaccess/settings.php configured and working correctly for my hosting/domain situation, it seems to working great and I have several drupal sites setup under one system, I add modules to the mother site and they are available to all the sites in the system. My problem stems from a pathing issue. When installing the imagecache modules (built on imageapi) it uses the file paths and somehow is intercepting them so it can deliver the images. for example. when I upload an image in a daughter site, the image should display but does not, the URL that is failing is:

http://sandbox.mydomain.com/site/photos/sites/default/files/imagecache/Thumbnail/uploaded_images/moz-screenshot-35.jpg

lets break this down.
http://sandbox.mydomain.com/ is actually www.mydomain.com/sandbox
site/photos/ is the url of the daughter site, others might be site/site2 or site/site3
the rest is natural drupal pathing.
sites/default/files/ the files location
imagecache/ the modules folder for files
Thumbnail/ the folder for the imachcache preset named Thumbnail
uploaded_images/ the folder defined in the filefield/imagefield cck settings
moz-screenshot-35.jpg thefilename.

In a normal site this path would be:

http://www.mydomain.com/drupalfolder/sites/default/files/imagecache/Thumbnail/moz-screenshot-35.jpg

If we look at the actual directories, we find this in the normal site:

drupalfolder/sites/default/files/imagecache/Thumbnail/moz-screenshot-35.jpg

But if we look in the multisite manager site it stops here:

sites/default/files/imagecache

So by the nature of the module and the problem, it cannot make, or is making in a strange place the operational folders it is using and so the images are not being displayed.

Hope you can help me sort this out.