Your server would need to be setup correct to allow SEO.
You should contact your webhost whose responsibility it is to setup your server. The htaccess file code is fully correct. Your server would need to support the use of htaccess files and mod rewrite would need to be functional.
There is nothing we can do to assist you with your actual server setup that is a little out of our limits.
Yep your server does not support htaccess and mod rewrite in the normal sense. Your placing records directory in the host config file which ever works for you. Like I said your host would know how there servers are setup and what they allow.