.htaccess in albums directory denies everything

OK, I got Gallery up and running with ease (thanks, guys!) My question has to do with trying to secure the /albums/ directory per the method described in the Album Security section of the installation guide. Here is the contents of my .htaccess file:

<IfModule mod_rewrite.c>
	RewriteEngine On
	RewriteBase /gallery/
	RewriteCond %{HTTP_REFERER} !^http://www.peppyfool.com.*$ [NC]
	RewriteCond %{HTTP_REFERER} !^http://peppyfool.com.*$ [NC]
        RewriteCond %{REMOTE_HOST} ^.*\.shutterfly.com$  [NC]
	RewriteRule .*.(jpg|gif|avi|png)$  -  [F]
</IfModule>

My gallery is located in http://www.peppyfool.com/gallery/
My albums directory is in http://www.peppyfool.com/albums/
I'm remote hosted on a shared server and don't have telnet access.

With this .htaccess file, none of the images are accessible from a browser session by linking or by direct access, which is exactly what I want. HOWEVER, Gallery itself can no longer access the images, either! If I remove the .htaccess file, Gallery works just fine.

Obviously there is an error in the way that I wrote the RewriteCond lines, but I'm only .00000002% fluent in Apache server so I don't know what to do to get it to work right.

Any ideas?

Thanks!
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Give us your Gallery/webserver information to get a faster answer.
Get this information from the PHP diagnostic (in the configuration wizard).
Gallery URL (optional but very useful): http://www.peppyfool.com/gallery/
Gallery version: v1.3.4-pl1
Apache version: 1.3.27
PHP version (don't just say PHP 4, please):
Graphics Toolkit: NetPBM
Operating system: Linux
Web browser/version (if applicable):