Tecno,
First, you need to make sure mod_rewrite is working on your server. Second, make sure the htaccess file is named .htaccess (I think it ships as ._htaccess). Finally, check the BaseFolder (or it's called something like that) in htaccess. If you're installed at www.domain.com, then a / (slash) is correct. If you're installed at www.domain.com/folder, then set it to "/folder".