[support] Drupal multisite install

[Roger]

I'm trying to understand Drupal multisite install which no matter what I
try does not work. I have read and applied steps from most of the
instructionals and tutorials.

Set up in /var/www/html.

I have 127.0.0.1  site1  localhost in /etc/hosts

I have DocumentRoot, ServerAdmin, ServerName,RewriteEngine, etc set up
in <VirtualHost> in httpd.conf (Fedora14)

I have first.com/sites/default and first.com/sites/site1 which has
settings.php renamed from default.settings.php
chmod 777 on /sites/site1 and chmod 666 on settings.php

localhost/first.com works and is operational 
localhost/first.com/site1  gives Not Found error
localhost/site1  gives Not Found error
localhost/first.com.site1 gives Not Found error

errorlog reports [Sun May 15 05:44:47 2011] [error] [client 127.0.0.1]
File does not exist: /var/www/html/first.com/site1

accesslog reports 127.0.0.1 - - [15/May/2011:05:44:47 +1000]
"GET /first.com/site1 HTTP/1.1" 404 288

Is this a problem with /var/ww/html, should I have a directory
in /home/user and set ServerRoot to that directory?

I'm trying to understand the role of .htaccess on my local machine
because on the remote server I cannot alter httpd.conf so overrides have
to be in the root .htaccess and this also has me stumped.
Should I put the <VirtualHost> in .htaccess and leave httpd.conf
untouched. It does not discuss this in the tutorials that I have read.

Thanks in advance
Roger