Gallery3 New install, Hostgator VPS, Error 500

Hi All,
I have been a user of Gallery2 for years. I used to have G2 embedded in my main e107 site. After moving from shared hosting to VPS, I've been plagued by problems with the administrator account that never seemed to be resolved.

So, now I'm taking the opportunity to start new with Gallery3 and break Gallery into it's own part of the site so I am not dependent on 3rd party bridges or other embedding methods.

My problem is, I am seeing Error 500 screens after the install completes.
I read the Gallery3 FAQ and the Server specific problems, but there are no solutions for me in there.

I'm on a Hostgator VPS. My phpinfo file is http://gallery.w2lie.net/g3/phpinfo.php

I have edited the php.ini in my virtualhost root path. Ex: /home/<user>/php.ini to include the edits as found on the Gallery3 install page

I added this into my httpd.conf file under the proper virtual host (it is a subdomain)

## For Gallery3 Install
<Location "/g3/">
AllowOverride +Options
</Location>
## End Gallery3 Install 

With that code, Apache fails to reload

-bash-3.2# service httpd restart
[Sun Jul 29 10:46:56 2012] [warn] Useless use of AllowOverride in line 1006 of /usr/local/apache/conf/httpd.conf.
Syntax error on line 1006 of /usr/local/apache/conf/httpd.conf:
Illegal override option +Options
httpd not running, trying to start
-bash-3.2# 

I opened a ticket with my hosting company to take a look at it, and all they did was modify the .htaccess file included in the gallery3 install to include the following:

<IfModule mod_suphp.c>
suPHP_ConfigPath /home/<user>
<Files php.ini>
order allow,deny
deny from all
</Files>
</IfModule>  

(In all examples, <user> replaces the full path)

Any help to get my Gallery3 up and running would be greatly appreciated.
Thanks