Thankfully, I didn’t change the .htaccess page. Instead, I found this page on creating archives and about pages which was helpful.

1. Log into your WP Administration panel and click on the Presentation link.
2. Assuming you have the Cutline theme activated, you’ll notice a link in the sub-navigation menu called Cutline Options.
3. On the Cutline Options page, simply check the box next to “Enable the Cutline Archives Page.”
4. Click the Update Options button to create the Archives page.
5. In order to ensure that your new Archives page gets published properly, you’ll need to click on the Manage link in the main navigation menu.
6. Once there, click on Pages in the sub-navigation menu.
7. One of your pages will contain the text “Archives” in the Title field – find that page, and then click on the Edit button for that page.
8. Locate the Save » button (which resides just beneath the main text entry box), and click it. You’re done!

The only problem was that when I went to step 6, there was no “Archives” page. So I created one, with the text box blank, and hit “Save.” Still no go. So instead I hit the “Publish” button, and this time it worked.

By the way, the instructions appeared to be for WordPress version 2.1. I have version 2.2 installed, so that may be the problem. I hope this helps others with similar issues.

Update:  by the way, the creating a “Archives” page tip came courtesy of PaulThology.

I found out why here.

The header code was constructed under the assumption that your permalink structure ends with the post name (for more info, read this section of the WordPress Codex). Unfortunately, the WordPress default permalink structure is not constructed this way. Thus, whenever someone who is using the default permalink structure attempts to use the links in the navigation menu, they will encounter this problem (i.e. their links won’t work).

The solution is to change the permalink structure in WordPress.