Well I recently installed PHPld V 2.1 in a sub domain in one of my Godaddy Hosted site.

The install was clean but the problem was that The SEO urls option was not working and everytime I activated that option, I would get a page not found error whenever I tried to access the category pages.

For this problem, the only tweak that I had to do was to edit my .htaccess file.

If you too are having problem with your SEO urls at Godaddy hosted PHPld directories (sub domain and sub folders), you would need to add the following line to your .htaccess file

 RewriteBase /

Add this right after

RewriteEngine On

Its working for me and hope it works for you too. 

If you would like to have a look at my directory: Photo Pumpkin Website Directory