Permalink Conflict?

Hi

I’m currently trying to get a new theme to work, but I’m having an issue.

I imported my entire site into a test domain, but it seems as if the sub categories are not properly displaying their images in the mega menu on the left-hand side. See “Best of Web”: http://test.theyogablog.com/

I tested the theme with a fresh install of wordpress without transferring my site content, and it appears to be working correctly: http://1.test.theyogablog.com/

The theme author seems to think this is a permalink issue, and encouraged me to post here and get feedback about my .htaccess file, in case there’s some kind of issue there with the permalinks.

Is there anyone that can help me with this?

Thank you!