[Plugin: W3 Total Cache] Changes to .htaccess file not taking effect

On the W3 Total Cache settings page I get the following message:
Browser caching is not active. To enable it, add the following rules into the server configuration file (/home/content/48/7578448/html/.htaccess) of the site (view code). Or if permission allow this can be done automatically, by clicking here: (auto install).

The auto install button didn’t work, so I did a manual cut and paste of the code into the .htaccess file in the root of my GoDaddy hosted webserver. The message continues however. Any idea what is wrong here? Thanks!

Here is the code I added to .htaccess:
[ Moderator Note: Please post code or markup snippets between backticks or use the code button. ]

# BEGIN W3TC Browser Cache
<IfModule mod_deflate.c>
    <IfModule mod_setenvif.c>
        BrowserMatch ^Mozilla/4 gzip-only-text/html
        BrowserMatch ^Mozilla/4\.0[678] no-gzip
        BrowserMatch \bMSIE !no-gzip !gzip-only-text/html
        BrowserMatch \bMSI[E] !no-gzip !gzip-only-text/html
    </IfModule>
    <IfModule mod_headers.c>
        Header append Vary User-Agent env=!dont-vary

http://wordpress.org/extend/plugins/w3-total-cache/