Problems trying to make Apache mod_rewrite and .htaccess work

Hi Experts:

I'm having troubles to make mod_rewrite work on my local server. I'm running Apache 2 in Windows XP, with mod_rewrite enabled.

In my httpd.conf file, I made the following change:

1. enabled mod_rewrite (by uncommenting the mod_rewrite script)
2. Added an alias and setup directory access for the alias
Alias /mysite "D:/mysite/"
<Directory "D:/mysite/">
    AllowOverride All
    Options None
    Order allow,deny
    Allow from all
</Directory>

That's pretty much all I changed in httpd.conf

Then under D:/mysite/, I created two PHP scripts, index.php  and test.php. Basically what I want to do is to rewrite every request to index.php, so I created an .htaccess file and put in the following:

RewriteEngine on
RewriteRule !\.(js|ico|gif|jpg|png|css)$ index.php

So I tried the following link:

http://localhost/mysite/index.php

but got the following error:

Forbidden
You don't have permission to access /mysite/index.php on this server.

Then I tried to turn off RewriteEngine, made the change in .htaccess

RewriteEngine off

This time http://localhost/mysite/index.php works. But obvious turning the engine off is not what I want.

So I did some research and made a little adjustment in <Directory>...</Directory>

<Directory "D:/mysite/">
    AllowOverride All
    Options +FollowSymlinks
    Order allow,deny
    Allow from all
</Directory>

As you see I changed the Options part. (from None to +FollowSymlinks)

This time http://localhost/mysite/index.php works fine. But when trying to access test.php, http://localhost/mysite/test.php, I got the following error:

Bad Request
Your browser sent a request that this server could not understand.

I'm an Apache starter and this is giving me major headache. Any help will be really appreciated!!!