permalinks and apache help

Hi All
The company i work for using a few servers with few websites on them, there is a reverse proxy server that get all the http requests and transfer them to an inside server where the WordPress site sit. we created new website with WordPress, there are now 70 blogs and the links set up on default.
I want to change all the links to permalinks that would look like:
http://www.mysite.cco.il/categoryName/blogName

my problems:
1. even when i open clean website and write new blog with permalink my apache could not find it and i get 404, on my local xampp(with minimum apache configuration) it works well.
2. what is the best way to change all my blogs to work with permalinks?
3. can i open new site with permalinks and than import all my blogs?

thanks,
Asaf