Hi cactus,
It seems the order of making the changes matter.
After installing:
1. I loaded the page example.com/forum.
2. logged in as admin
3. Then went to "ADMIN" -> "Server Settings" -> "CORE CONFIGURATION", and changed the setting for "Forum URL" to
http://example.com/forums and saved changes. Then a "404 Not Found" "The requested URL /forums/index.php was not found on this server." error appears.
4. At this point I then followed the steps in post above
5. I reloaded example.com/forums (No theme at this point)
6. Then went to "Themes and Layout" -> "THEMES AND SETTINGS" -> "SMF Default Theme" and changed specified URLs from .../forum/.. to .../forums/... I did the same for "Classic YaBB SE Theme" and "Babylon Theme"
Thanks.