Hi jbmail,
Firstly where have you installed pligg to, on the main domain or in a subfolder?.
If you have now set seo urls to 2 you will need to edit the .htaccess file in your pligg sites root directory. If you dont have a .htaccess file look for htaccess.default in the pligg directory and simply rename it to .htaccess on your server.
If you pligg installation is installed in a subfolder on your domain you will need to edit your .htaccess file rewrite path to include your subfolder name.
Open your .htaccess file.
Look For....
Change that line to...
Code:
RewriteBase /yoursubfoldername/
You may also need to do the same for the code below.
Code:
RewriteRule (.*)([^/])$ http://%{HTTP_HOST}/$1$2/ [R=301,L] Changing it to...
Code:
RewriteRule (.*)([^/])$ http://%{HTTP_HOST}/yoursubfoldername/$1$2/ [R=301,L] Save your .htaccess file on your server then clear your sites cache and see if that works.