URI/Routing//Default Controller/Htaccess Issue (dev. to live problems)

[eluser]underskor[/eluser]
For some reason, /controller/method/param always shows my default controller, but if I use /index.php/controller/method/param, it loads the correct controller.

This setup worked as intended 100% locally, but when uploaded to live server this issue was discovered. I'm fairly sure .htaccess is being parsed and mod_rewrite is enabled. Using incorrect syntax in .htaccess throws error 500's which would lead me to think it's being parsed, and mod_rewrite is enabled according to this test.Can't figure out what the difference between the two servers is.

.Htaccess:

Code:

DirectoryIndex index.php

RewriteEngine On

RewriteCond %{REQUEST_URI} ^system.*
RewriteRule ^(.*)$ /index.php/$1 [L]

RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d

RewriteCond $1 !^(index\.php|css)
RewriteRule ^(.*)$ index.php/$1 [L]

Code:

$config['index_page'] = "";

Anyone have any ideas/run into this problem before?