Well, as it turns out the problem is this. I have the following rewrites for the server but these break the installation.

location ~* ^.+\.(html|jpg|jpeg|gif|png|ico|css|zip|tgz|gz|rar|bz2|doc|xls|exe|pdf|ppt|txt|tar|mid|midi|wav|bmp|rtf|js)$
{
rewrite ^/.*(/wp-.*/.*\.(html|jpg|jpeg|gif|png|ico|css|zip|tgz|gz|rar|bz2|doc|xls|exe|pdf|ppt|txt|tar|mid|midi|wav|bmp|rtf|js))$ $1 last;
rewrite ^.*/files/(.*(html|jpg|jpeg|gif|png|ico|css|zip|tgz|gz|rar|bz2|doc|xls|exe|pdf|ppt|txt|tar|mid|midi|wav|bmp|rtf|js))$ /wp-includes/ms-files.php?file=$1 last;

expires max;
add_header Pragma public;
add_header Cache-Control "public, must-revalidate, proxy-revalidate";
break;
}

can somebody tell me how to include these rewrites so wordpress images work properly