i dunno if this thread will help, but perhaps worth a look:
http://wordpress.org/support/topic/33648
With regards to your specific problem, you will find a htaccess in your root anyway, this is for overall management of any subfolders in which you may have installed something, so youc an redirect or manage any calls to one subdomain/subdir and have it sent to another, or create unique error pages and so on for the root. This isn’t something you need to worry about, and shouldn’t affect WP.
WP uses its own htaccess file to set the permalink rules. I know you’ve probably done this half a dozen times, but:
1) delete the existing .htaccess file or remove everything inside of it and wipe it clean.
2) ensure that your htaccess file is a htaccess file – it must not be: .htaccess.txt or htaccess.txt or something like that – .htaccess and that alone
3) set your .htaccess to 777 – this is only for a moment
4) go to your permalink structure and insert the default permalink structure. This should write to the htaccess file – confirm this by viewing your htacess file – it was set to 777 so it would surprise me if nothing is in there. Set the htaccess to 644 once done
5) I have no idea why you have a redirect page at the moment since your permalinks aren’t working, but for now remove this – click anythig your site gives me that page – if you’re going to use one, choose a better picture :p Anyway it will only get in the way UNTIL you get your links working
6) As Matt stated, the archives diretory is a virtual directory, it doesn’t exist as such.
7) can you clarify what you placed in the site address – there are two blocks one where the actual address is and your preferred address – are they the same? Set the them both to where the actual install is for now. Do this in the admin area
8) put in the full site address including the subdirectory with the archives ending, eg:
http://mysite.com/wpinstall/archives
or
http://mysite.com/wpinstall/archive
One of the two will work I forget which one it is. Your permalink structure is messed up so until you get that working you’re going to have problems with getting anywhere.
Let us know how you get on. Try not to avoid skipping any steps, it’s only guidance but if you hit a problem at even repeating something then it gives some idea. Try to at least get your permalinks working correctly – do this as the maximum first, then report back to confirm your permalinks work. then we can tackle the archives.
EDIT: disable any plugins you may have been running bar the bare minimum they can sometimes confuse matters – you can keep your spam plugins working, but disable other stuff that is simply excess, including any archive plugins
