Index: wp-includes/rewrite.php
===================================================================
--- wp-includes/rewrite.php	(revision 17221)
+++ wp-includes/rewrite.php	(working copy)
@@ -1907,7 +1907,10 @@
 
 		$this->use_trailing_slashes = ( '/' == substr($this->permalink_structure, -1, 1) );
 
-		$this->use_verbose_page_rules = (bool) preg_match( "#^/%(postname|category|tag|author)%#", $this->permalink_structure );
+		$clean_structure = str_replace( '/index.php', '', $this->permalink_structure );
+		if ( is_multisite() && !is_subdomain_install() && is_main_site() )
+			$clean_structure = str_replace( '/blog', '', $clean_structure );
+		$this->use_verbose_page_rules = (bool) preg_match( "#^/%(postname|category|tag|author)%#", $clean_structure );
 	}
 
 	/**