Internal Server Error on uploaded images

http://www.rumblenews.com/project/ckfinder/userfiles/2/images/DW-1390_Wifi.jpg

Well, I'm back at it this morning. I checked on the original poster's image this morning, and now it gives a 500 error -- but it worked last night. Hmmm. Mine is still down. I'm running the site in a Linux apache server. I'm accessing it from an xp machine. I've tried both the latest firefox and latest ie. I'm really hoping that someone can find a fix for this!

FIX: Okay, I've have found the fix. The .htaccess file. If I rename it, error goes away. Images work, hooray. Now, I'm sure that the .htaccess file was there for a reason. It's contents are "php_value engine off" -- I believe that prevents *.php files from running in sub directories (a GOOD thing for security). However, it is breaking the images somehow.

New Question: How can we modify the .htaccess file to keep images working, but to prevent *.php files from being uploaded and run by "hackers"?

<IfModule mod_php5.c>
  php_value engine off
</IfModule>
<IfModule mod_php4.c>
  php_value engine off
</IfModule>