trouble with wordpress and suPhp

[Ovidiu]

wordpress has placed this .htaccess inside my web folder and needs it:

# BEGIN WordPress
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>

# END WordPress

seems ok to me, at least it ran with ispcfg2
now I get an 500 server error and the log file says:

.htaccess: RewriteEngine not allowed here

can't find much on this with google, I checked and the rewrite module is loaded with apache2.
I tried adding this directive within the ispcfg3 administration ot this certain website but it didn't help:

<Directory "/var/www/clients/client1/web2/">
Options All
AllowOverride All
Order allow,deny
Allow from all
</Directory>