I had exactly the same problem.
Changing the permalink to /%postname%/ WordPress told me to update my .htaccess file.
It took me a bit of time going through these forums and then using my ftp program to show all the hidden server files to realise there in fact was no .htaccess file.
So I opened up notepad and put this code in it:
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>
and saved it as “.htaccess” (with the quotes included).
then uploaded via ftp to the root directory of my server.
it worked a treat.
Now, why couldn’t they have made it that simple me. At least if you’re reading this you won’t have to waste a day working on this problem.
have fun….
