To enable SEF URLs you need to:
Be running on Apache.
Make sure the mod_rewrite apache module is installed (it is a default on most installs).
Rename htaccess.txt to .htaccess in the Joomla root directory (might already be named .htaccess).
Edit the .htaccess file and remove the coment char “#” from the following lines:
Options FollowSymLinks
RewriteEngine On
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteCond %{REQUEST_URI} ^(/dev/component/option,com) [NC,OR]
RewriteCond %{REQUEST_URI} (/|.htm|.php|.html|/[^.]*)$ [NC]
RewriteRule ^(content/|component/) index.php
In my situation I also had to add the following line to the .htaccess file to stop a Forbiden Access error:
# To allow execution of cgi scripts in these directory uncomment next two lines
AddHandler cgi-script .bat .exe .pl .cgi
Options +ExecCGI