You can change the HTTPD.CONF file. The word you have to look for is : AllowOverride.
Here you will find several occurances from, the 1 you wanna change is the 1 in the primary section (/home/e-smith/primary/html) and change the NONE to ALL to make it become active.
Give it an update and restart your apache and it will work for you.
Grtx, Harro
PS : I'm not responsible for securityholes because of this adjustment.