Hello,
1. I set up a sub domain [shop] of the Master then configured it.
2. Created a template of the sub domain [shop]
3. Created a new site on another sub domain [coffee]
4. created a new site on another sub domain [reserve] **

On the (4) one i wanted this to go to a specific domain name we have pointed to our master web site. We want the domain name to point to that (4) sub domain [reserve]

**Problem: Sub domains appear normal with their own images and templates copied. But when we use the domain name pointed to the same (4) it appears to pull templates and no images from the sub directory site.

www.mysite.com shows wrong files (created multi site for this domain)
www.mysite.com/reserve shows correct files

Joomla Multi Sites version: 1.2.32 (Latest available: 1.2.32)
Patches definition version: 1.2.38 (Latest available: 1.2.38)
Joomla 1.5.18

Server Manager: INTERWORX (not cpanel or plesk)
Unix System
Symbolics Allowed

Database Version: 5.0.77
Database Collation: utf8_general_ci
PHP Version: 5.1.6
Web Server: Apache/2.2.8 (Unix)

In the defniition of the slave site #4, you have to specifcy that the www.mysite.com and www.mysite.com/reserver are synonyms.

I don't understand why you have the "root" mysite.com domain and it subdirectory mysite.com/reserve be synonym.

Perhaps you want www.domain1.com synonym of www.domain2.com/reserver (different domain).

In all the cases, you have to define both the domain and subdirectory in the same slave site definition to make them synonym.
This also mean that you have to configure your HTTP Server (Interworks) to be assigned with the path corresponding the the '/reserve" directory.