Permalink Structure broken

Hi,
I am trying to move my blogger blog to wordpress.i want to retain my old post links for PR.
as described in docs, i have used Manage –> Import tool . as my webhost does not support Direct connection to google, i have done a local install of wordpress using XAMPP(windows). later i would export Mysql DB

1) Only the default Permalink Structure http://localhost/wordpress/?p=123 works, rest everything results in 404 page not found. i want to use Structure like “Month and name: http://localhost/wordpress/2008/09/sample-post/”

2) I get the same error with default “Hello World” post whenever i try to change Permalink Structure anything else then default, even before importing posts & comments from blogger.This happens on a fresh install of wordpress, no customizations made

here is the full error

Object not found!

The requested URL was not found on this server. The link on the referring page seems to be wrong or outdated. Please inform the author of that page about the error.

If you think this is a server error, please contact the webmaster.
Error 404
localhost
09/04/08 08:28:48
Apache/2.2.9 (Win32) DAV/2 mod_ssl/2.2.9 OpenSSL/0.9.8h mod_autoindex_color PHP/5.2.6