Menu links do not work

I actually don’t know which WP version is on server. Just installed it and it is asking to be updated to 3.4.2
Just started building the site: http://www.libbyhanley.net/wordpress
Set up all my pages using the wp custom menu feature. When I click on any of the menu items I get the 404 message.

I know it isn’t a theme issue because I have switched to several.

On my permalink page I have this: If your .htaccess file were writable, we could do this automatically, but it isn’t so these are the mod_rewrite rules you should have in your .htaccess file. Click in the field and press CTRL + a to select all.
This is in the field: <IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /wordpress/
RewriteRule ^index\.php$ – [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /wordpress/index.php [L]
</IfModule>