Just to let you know that I have done a complete re-install of WordPress, activated Permalinks but have NOT installed the WPSuperCache plug in.
Fingers crossed, it seems to work now.
There’s still a problem about WP writing to the .htaccess file. I have put .htaccess files with the recommended code in both the blog directory and the wp-admin directory. I don’t know which one is needed.
I changed the permissions to 777 for the .htaccess files and the permissions on the sub-directories in the blog directory to 755. I noticed that the permissions had been set to 2755. I have no idea what that means and why that should be.
I’ve just updated to WP 2.5.1 and got this same error message.
It wasn’t obvious to me that I just had to click on Upgrade WordPress because I didn’t realise it was a link. Doh!
Fortunately, all seems to be well now. Fingers crossed.