Using Permalinks with localhost xampp install

I cannot seem to get permalinks to work with wordpress on my local host install. I’m have xampp as a localhost setup.

I have searched of help and found the instructions for enabling mod_re-write by editing the apache\cong\httpd.conf file and have done so.

http://www.lancelhoff.com/how-to-make-wordpress-permalinks-work-in-xampp/

Still it does not work. What happens is that if select anything other that “default” in Dashboard>Settings>Permalinks an .htaccess file is created in the top level of the WP install. The WP site then returns a 500 server error and will not display and I have no way to view the site or access the dashboard. If I delete the (newly created by WP) .htaccess file then the site is able to display properly and I can use the dashboard again etc.

Here is the contents of the .htaccess file that gets created;
# BEGIN WordPress
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /xampp/openrange/blog/
RewriteRule ^index\.php$ – [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /xampp/openrange/blog/index.php [L]
</IfModule>

# END WordPress

I have 5 different WP sites on my localhost and they all have this inability to use pretty permalinks. I’d really like to get pretty permalinks working on my localhost but cannot seem to figure out how.
Any help will be much appreciated