.htaccess and permalinks

I’m trying to change the permalink structure to one of the formats suggested on the options page but can’t get it to work. I have an apache server and do have mod_rewrite and I went in and added the extra stuff to the .htaccess file. The blog URL is http://www.virtuallydesigned.com/gottamake/ and the .htaccess file is in the root folder instead of the gottamake folder. Does that matter? I wasn’t sure if you could have 2 .htaccess files, one in each place, or not. Should I put one in the gottamake folder, too, or is the problem something else?