I had to change the config file for the site that is running to allow a .htaccess file to be used, you need to add
<Directory "/Users/yourUsername/Sites/wordpress">
Options All +MultiViews -Indexes -ExecCGI
<IfModule mod_dav.c>
DAV Off
</IfModule>
AllowOverride All
</Directory>
where the directory is pointing to your wordpress directory.
sam d