I’m having this problem now. I actually know how to chmod the .htaccess file and have done it successfully with several WP blogs by now. But since I’m using the new version, suddenly I have a problem and it doesn’t matter whether I chmod to 777, whether I copy and paste the code into the file myself, or what. I don’t understand what I’m doing wrong when I’m doing the exact same thing that worked with previous WP versions. ACK.
(edit) Never mind. I forgot that if you have any test pages (not posts) it affects whether the permalink structure changes. So if any other noobs come after me who didn’t know this either, make sure you have NO POSTS OR PAGES UP when you change the permalink structure, otherwise it won’t work even if you successfully chmod the .htaccess file. D’oh! And I’m sorry I posted on a resolved thread. *hangs head in shame*