Adding Permalinks

Hi

I having trouble adding permalinks. basically I am wanting the urls to be mysite.com/project/projectname

where project is the page and projectname is the argument

mysite.com/project?pn=The-project-name

I seem to be able to get something of a permalink running but only it the argument is a number. for instance this works
mysite.com/project/1 but I have a suspicion this works even without using permalinks

but this doen’t
mysite.com/project/projectname it just creates a page not found error

I’ve looked at a number or solutions including the codex but nothing seems to work

the code in my functions.php files is:

add_filter( 'rewrite_rules_array','my_insert_rewrite_rules' );
add_filter( 'query_vars','my_insert_query_vars' );
add_action( 'wp_loaded','my_flush_rules' );

function my_flush_rules(){
	$rules = get_option( 'rewrite_rules' );

		if ( ! isset( $rules['(projects)/[^/]+/([^/]+)/?$'] ) ) {
		global $wp_rewrite;
	   	$wp_rewrite->flush_rules();
	}
}

function my_insert_rewrite_rules( $rules )
{
	$newrules = array();
pagename=$matches[1]&id=$matches[2]';
$newrules['(projects)/[^/]+/([^/]+)/?$'] = 'index.php?pagename=$matches[1]&pn=$matches[2]';

	return $newrules + $rules;
}

function my_insert_query_vars( $vars )
{
    array_push($vars, 'id');
    return $vars;
}

anyone able to help me out with this?

thanks