This is a simplified version of a problem that I've encountered. I've tried numerous solutions, but with no luck.

Suppose that you have 2 cylinders, created with the same length, but one has a radius of 1, and the other has a radius of 2 (both oriented along the +Z direction). Then you create a similar set of two cylinders also oriented along the +Z direction, but translated so that there is a one unit overlap between the first set and the second set of cylinders. Think of this as two overlapping pipes. To create the solid part of the pipe, you take cylinder 1 - cylinder 2 (for both sets), mesh this subtracted volume and mesh the inner pipe. The you export from Gambit to Fluent.

The problem I've found is that the inside faces remain as walls, even though the volumes have been specified as fluids. I have tried a number of ways to get around this problem but with no success. For this simple problem, it's easy to unite the volumes and then mesh, but for a more complicated geometry this doesn't work. Any suggestions?

I don't understand your problem. if im right, maybe you meant inside face is overlapping face. if that so, you really cannot specify juction like that. the other way is

1. draw a long 2 pipe 2. Draw a face anywhere u like 3. then split pipe with face 4. specify splitting face as interior