author/name directory error

hello all,
I installed wordpress on a subdomain of my site http://watercooler.markushartel.com 2.7.1 with the sixx microblogging theme, everything was smooth sailing, but I’m getting one error where wordpress can’t access an authors profile

where http://watercooler.markushartel.com/author/mhartel fails
but http://watercooler.markushartel.com/?author=1 works

both are working on my wife’s site with an older wordpress version (2.6.x) on the same webhost… I think this is a permission problem, but I can’t figure it out.

any ideas?
thanks in advance