404 -- page not found in drupal

Hello, I'm using PHP5/MYSQL4/APACHE2 on Suse 10.0. I get a page when I go to my installation (http://localhost/drupal) but directly to the right of the login box I see an error "Page not found". When I go into includes/common.inc and look at the code the drupal_not_found function is being executed.

I've verified these things already:
1. database access works (not getting any errors as to this)
2. no errors in the Apache log file
3. I've set permissions of from the /drupal directory up to same user/group as the Apache2 server.
4. confirmed /sites/default/settings.php is correct

I can't create users, "edit primary links" is there on the top left, etc.....

Any ideas? Thank you...

--Dinos