First thing I'd try is removing the top line of the .htaccess file,
the option for following symbolic links:
Options +FollowSymLinks
Depending on how apache is setup for your environment that may or may
not be causing the server error. If that doesn't work, it may be that
mod_rewrite isn't enabled in the apache installation you have, or that
you need to enable overrides via .htaccess files for where your files
are being served from. Let me know if any of those approaches work,
or if you have more questions on them.