Running CodeIgniter from Subfolder on Godaddy

[eluser]yorgo[/eluser]
I believe $system_path and $application_folder are correctly set. Otherwise I wouldn't be getting as far as I am.

In the IF statement I mentioned 'if (file_exists(APPPATH.‘controllers/’.$segments[0].EXT))' the expression evaluates to 'if (file_exists(APPPATH.'controllers/index.php'))' which is where it fails.

Changing the file name to Index.php passes (with the capital I). Giving me more assurance in the integrity of the path names.

I'm wondering if it has to do with the htaccess file or a PHP setting that I'm not aware of?

Any other ideas?