Note that the file needs to be called ".htaccess", not "htaccess". There is a "." in the front.

OK when I changed the htaccess to .htaccess I get this error see below.

please advise.

Internal Server Error

The server encountered an internal error or misconfiguration and was unable to complete your request.

Please contact the server administrator, [no address given] and inform them of the time the error occurred, and anything you might have done that may have caused the error.

More information about this error may be available in the server error log.

It sounds like your server isn't configured for Elgg.  Have you checked out the Technical Requirements and Installation Troubleshooting docs?