That error message is indicative that the device file entries have not been created in /dev/md/rdsk and /dev/md/dsk. The default value for nmd is 128, so you will only have devices d0 thru d127. Simply editing the /kernel/drv/md.conf file does not create these device files. You must run the devfsadm command or do a reconfiguration boot to create them. Also, per Sun's recommendation, you should only set nmd and md_nsets to values slightly higher than the number of volumes you plan to use for optimal performance.