HTTP Error on Image Upload-Crunching

Hello! I just installed WordPress 3.0 and am receiving the ‘HTTP Error’ when I upload images with the flash uploader. I tried using the basic uploader and receive the message ‘Error 500 – Internal server error An internal server error has occured!
Please try again later.’

I have read pretty much every forum thread about various HTTP errors while uploading images, and have tried all the fixes, but none have worked so far. I do not have an .htaccess file, so I created one in TextEdit, inserted the code:
# BEGIN WordPress
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>
# END WordPress

(as instructed on http://codex.wordpress.org/Using_Permalinks#Using_.22Pretty.22_permalinks)

I saved this as .htaccess, uploaded via FTP, and then I loses access to my site (and am given the ‘Error 500- Internal Server Error message).

I have manipulated the code various ways as instructed on different forums, but none fix the problem. (AddType x-mapp-php5 .php) (AddType x-mapp-php5 .php
AddHandler x-mapp-php5 .php) (SecFilterEngine Off SecFilterScanPOST Off)

When I delete the .htaccess file I can get into my site again, but then of course I am back to my original problem of the HTTP Error while uploading images.

I use 1and1 and they are running MySQL 5. (And I use Mac OSX 10.4.11 if that matters at all!)

I am wondering if I need to edit something in the .htaccess file? (I know absolutely nothing about this or its function.) My site is http://www.marenmisner.com/wordpress -does it matter that it is not my index page? (I don’t think, anyway.) Please help!! Thanks!