.htaccess file causing folder permissions to fail

the .htaccess file is causing folder permissions to fail.

If there is no .htaccess file I can browse like this:

http://www.mysite.com/
http://www.mysite.com/folder/

etc. no problem.

but when the .htaccess file is there it won’t work (says I don’t have permissions) so browse like this:
http://www.mysite.com/index.htm
http://www.mysite.com/folder/index.htm

I need to keep the .htaccess file
but I also need folder access browsing

any help is appreciated
thanks