Someone asked me to help him set-up a simple mod_rewrite rule in a .htaccess file. All looked so simple but unfortunately it did not work. Tried the code on a few other hosting services and it worked just as it should. A bit of digging and I found the following which cured the problem.
RewriteBase /
Just put that before your mod_rewrite rules in .htaccess and it works just fine.
p.s. This was on the cheapest GoDaddy Linux service (I say this because some people on the ‘net claimed that it does not work on the GoDaddy budget hosting account), other then that I must say the speed is not bad for a cheapo service