I’m having an IDENTICAL problem.
I’ve just installed wordpress freshly on godaddy (using their auto instal feature) and made a post… then realised I should set the permalinks to /postname/ but got 404’s, and I presumed this was because I’d already started doing stuff.
So I deleted everything and created a wordpress install and DB freshly once more, and this time changed the permalinks away from their defaults immeadiately, but STILL get 404’s… it’s rendering my hosting POINTLESS unless I can fix it..