I’m not sure why mine works for me and not you. This doesn’t modify the .htaccess file i don’t think. This is what i have in mine –
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteRule ^index\.php$ - [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>
which is the standard WordPress one i believe, i’m using WordPress 3.4 and my permalink rule is as follows:
/%taxonomy_name%/%postname%/
What version of WordPress are you using? Maybe the developer can shed some light on why it works for me and not you.