This problem (which I just ran into myself) is that the Apache config file is not allowing certain things to be controlled by .htaccess. Somewhere in httpd.conf you will find a line like:
AllowOverride None
That specifies which options the .htaccess file is allowed to use. The Rewrite module requires use of the FileInfo module. So in the entry for your host’s directory, you need something that looks like.
AllowOverride FileInfo
Make that change, and the new PermaLinks will work just fine.
More specifically, here’s a complete example.
<VirtualHost *:80>
DocumentRoot "/usr/local/www/somewherefilms.com"
ServerName somewherefilms.com
ServerAlias www.somewherefilms.com
ErrorLog "/usr/local/www/logs/somewherefilms.com-error_log"
CustomLog "/usr/local/www/logs/somewherefilms.com-access_log" common
<Directory />
Order deny,allow
AllowOverride FileInfo
</Directory>
</VirtualHost>
If you can’t get your ISP to add FileInfo to AllowOverride, then you’re pretty much stuck.
