Change this line in your config.php:
$bb->mod_rewrite = slug;
$bb->mod_rewrite = false;
That should fix the problem. Your server configuration does not support the .htaccess rewriting rules you have set up. Changing this to false turns off the need for mod_rewrite and .htaccess. You can get them working later.
Also, it’s possible the might work if you spelled and quoted it properly. It should be
$bb->mod_rewrite = 'slugs';
and that will work if your server supports mod_rewrite and you have the proper .htaccess rewrite rules in place.