404 when viewing assets
I'll use myself as an example, so if something isn't right we'll know who to blame.

First thing I do is set up an environment variable in my craft/config/general.php file like this:

...
'.dev' =&gt; array(
    'devMode' =&gt; true,
    'siteUrl' =&gt; 'http://mysite.dev/',
    'environmentVariables' =&gt; array(
        'basePath' =&gt; $_SERVER['DOCUMENT_ROOT'] . '/',
        'baseUrl' =&gt; 'http://mysite.dev/',
    )
)
...


Then, when I am creating assets sources, I'll create a general "Images" source:

Name: Images
Handle: images
File System Path: {basePath}media/images/
URL: /media/images/


Note that I am using my environment variable in the file system path.

{basePath}


You can call that whatever you want, it just has to match.

So if you were to view the source of my site, an image that was uploaded would have the path of:

http://www.mysite.com/media/images/my-image.jpg


Hope this helps!