“The page isn’t redirecting properly” error since 2.3

I’ve tried to install WordPress 2.3 and 2.5 (including 2.5.1) at http://www.yorku.ca/hebblab/wordpress, but each time I visit the URL, I get a “The page isn’t redirecting properly” error from Firefox. IE just attempts to load the page forever but never gets anywhere.

We have a WordPress 2.0 running at a different location on the same server, but that’s the last version that runs properly.

Interestingly, http://www.yorku.ca/hebblab/wordpress/wp-admin opens fine. However, the url produced in the end is:
http://www.yorku.ca/hebblab/wordpress/wp-login.php?redirect_to=%2F%257Ehebblab%2Fwordpress%2Fwp-admin%2F
Logging in, writing posts/pages and logging out seems to work fine.

I’m really wondering about the strange redirect_to snippet. %257E most of all. 7E is ~ in hex which makes sense because yorku.ca/hebblab is really yorku.ca/~hebblab. After the initial installation WordPress never works until I change the URLs in the mySQL database (or wp-config.php now), which are usually set to …yorku.ca/%E7hebblab. It’s trying to stick the ~ in there.

All this makes me thing that something similar happens when trying to open the index.php.

I have a feeling that .htaccess may be capable of fixing this, but I have no idea how. Mostly because I can’t really pinpoint the problem, but rather only hover around it.
Either way, this has made upgrading WordPress from 2.0 impossible and is especially frustrating to deal with.

Any suggestions would be very welcomed.