This is related to questions about the following:
1. My permalinks works when i use the default
2. My permalinks do not work when i change it to an SEO Friendly Link Name
You may have noticed a note that says you need to update your WEB.CONFIG file. At the bottom of this page it gives you code to update your WEB.CONFIG file. If you see this message you can follow these instructions because Wordpress is trying to update this file for you but cant.
This may be due to your WRITE rights on your WEB.CONFIG file located in the root diretory. This file should have WRITE rights enabled. You can set these rights within your panel under Website Services ->Folder Security.
Drill down to the WWW folder and locate WEB.CONFIG and choose to add/remove permission. Find your website security name and click on it. Then choose Modify and choose Add/Change.
This should be all you need to do.
You can read more about permissions at http://codex.wordpress.org/Changing_File_Permissions
