I am confused about the htaccess thingy

It does edit it for you if it is writable, BUT, it does that based on what you enter in the options>permalinks section. I think you need only enter %postname% – Not the .html.
Try that and see if it works.

If you want search engine friednly urls then you should have permalinks on.

You will need to ensure that the file has writable permissions set before WP can write/update that file for you.

When you are on the Options->Permalinks page, if WP was able to access the file properly, then you should just be able to enter your structure and hit the UPDATE button to have it written out to the .htaccess file.

If, however, WP couldn’t access the .htaccess file properly, you will see a textbox containing the contents of the .htaccess that you will have to copy into the file.

Additionally, you should probably use a slightly more descriptive structure than just the postname.

The default of /archives/%year%/%month%/%day%/%postname% works. You can add or leave out the .html part at the end, most search engines don’t care about that.

Regards

what file attibutes should I set my htaccess to? should it be 777 or 666?

I’m not sure if this has anything to do with this thread but I am running 2.0.1 and I am trying permalink structure
/%postname%/%monthnum%/%year%/ and I get a warning notice “you should update your htaccess now”
Is this correct and being a newbie I am not sure how to do that?

Richard