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Why /srv? Virtualmin defaults to /home, because that's where users live, and Virtualmin manages users. But, it should still work in /srv, as long as you've configured it correctly.
It probably is a permissions issue. The Apache user (whatever user that is) needs to be able to reach the directory and read the files within it. On Linux systems, Virtualmin can add Apache to the group of the newly created virtual server, which insures it has access to the public_html directory of the user. If this is Solaris or FreeBSD, I don't believe that's an option, so permissions on home directories and the path all the way up to the document root can never be tighter than 751.
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