htaccess on xampp?

[eluser]Lost_all_hope[/eluser]
I'm just getting to grips with CI, and spent a fair amount of time learning ZF but looking a CI this is more to what my requirements are, but having trouble dropping index.php out of the url, I've followed the instruction manual No Joy, Mod_Rewrite is set up and working correctly, it's working on other test projects.

Using VHOST in XAMPP I have the following:
<VirtualHost *:80>
##ServerAdmin [email protected]
DocumentRoot "C:\sites\ci"
ServerName ci
<Directory "C:\sites\ci ">
Order Deny,Allow
Allow from all
RewriteEngine On
RewriteBase /

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

RewriteRule ^(.*)$ index.php/$1 [L]
</Directory>
</VirtualHost>

HOST file

127.0.0.1 ci

Project Structure is as follows:
ci/
ci/system (this will be removed once live outside of the root of the site)
ci/index.php
ci/.htaccess (disabled at this point)
ci/user_guide (this will not be on the live site)

I've created a class of application/controllers/blog.php and view of application/views/blog_view.php and changed base_url in config.php to http://ci/

with the above setup I go to http://ci/blog/ it works, moving the Rewrite stuff to .httacess and removing the Rewrite stuff from the VHOST file, restarting Apache I get a 404 Object not found?? unless I use http://ci/index.php/blog/

I wish to put the Rewrite stuff in .htaccess file ready for when it goes live, as I don't have access to the VHOST file on the server, so getting .htaccess working in Development makes sense.

Anybody using XAMPP or a local server using VHOST who has had this issue and over come it could you please let me know how to get it working?

Thanks in advance

Mal