I'm completely new to Atahualpa but was considering using it. I've just made a clean install of WP 3 and installed the theme - it looks OK when I activate it on the "main" site but when I activate it for a "sub site" it looks very different (=broken).

Doesn't Atahualpa work for a multi-site install or is there something that need to be set?

I've got Atahualpa 3.5.1 working fine so far with Wordpress 3.0 with multisite enabled. Did you FTP the Atahualpa 3.5.1 folder into the wp-content/themes directory then activate it through your main site's dashboard? After you do that, you still need to activate the theme for your networked blogs in the Super-Admin area under "Themes". Once you do that you'll be able to see it in the themes area of all of your "child" sites.

Hopefully that helped...not hurt =)