I am having this same problem.
I have created an add on domain. all is pointing to DNS properly and works---here is situation. www.mainsite.com works properly, then www.addondomain.com works as well however; unless i REDIRECT addondomain.com to www.mainsite.com/addondomain.com/ none of my images display? I have the entire site built and need to get it up and running immediately and do not want browser to display as http://www.mainsite.com/addondomain.com. Please if anyone has encountered this and has possible solutions PLEASE PLEASE let me know.
Thanks,