.htaccess file is blocking /sites/default/files

I just installed Drupal on the staging server it is windows 2003 running IIS6 I am using Helicon to run a .htaccess file for clean urls. Everything was working great Friday and then I come in today and the images are not loading.

The clean URL's are working and I am able to navigate around the site, just no images.

The clean URLs work:
/sites: directory listing denied
/sites/default: directory listing denied
/sites/default/files: Drupal's Page cannot be displayed

All of my images are in /sites/default/files/images ..... so as you can see its breaking on the /files part of the url

If I delete mysite.com/.htaccess file...... all of the images load... but the clean URL's don't work.

I cannot for the life of my figure out what might have changed since friday...

Here is the contents of my .htaccess file.. can anyone tell me why .htaccess is breaking when i get to /sites/default/files??

I really appreciate any help this has be quite stumped!

#
# Apache/PHP/Drupal settings:
#

# Protect files and directories from prying eyes.
<FilesMatch "\.(engine|inc|info|install|make|module|profile|test|po|sh|.*sql|theme|tpl(\.php)?|xtmpl|svn-base)$|^(code-style\.pl|Entries.*|Repository|Root|Tag|Template|all-wcprops|entries|format)$">
  Order allow,deny
</FilesMatch>

# Don't show directory listings for URLs which map to a directory.
Options -Indexes

# Follow symbolic links in this directory.
Options +FollowSymLinks

# Make Drupal handle any 404 errors.
ErrorDocument 404 /index.php

# Force simple error message for requests for non-existent favicon.ico.
<Files favicon.ico>
  # There is no end quote below, for compatibility with Apache 1.3.
  ErrorDocument 404 "The requested file favicon.ico was not found.
</Files>

# Set the default handler.
DirectoryIndex index.php

# Override PHP settings. More in sites/default/settings.php
# but the following cannot be changed at runtime.

# PHP 4, Apache 1.
<IfModule mod_php4.c>
  php_value magic_quotes_gpc                0
  php_value register_globals                0
  php_value session.auto_start              0
  php_value mbstring.http_input             pass
  php_value mbstring.http_output            pass
  php_value mbstring.encoding_translation   0
</IfModule>

# PHP 4, Apache 2.
<IfModule sapi_apache2.c>
  php_value magic_quotes_gpc                0
  php_value register_globals                0
  php_value session.auto_start              0
  php_value mbstring.http_input             pass
  php_value mbstring.http_output            pass
  php_value mbstring.encoding_translation   0
</IfModule>

# PHP 5, Apache 1 and 2.
<IfModule mod_php5.c>
  php_value magic_quotes_gpc                0
  php_value register_globals                0
  php_value session.auto_start              0
  php_value mbstring.http_input             pass
  php_value mbstring.http_output            pass
  php_value mbstring.encoding_translation   0
</IfModule>

# Requires mod_expires to be enabled.
<IfModule mod_expires.c>
  # Enable expirations.
  ExpiresActive On

  # Cache all files for 2 weeks after access (A).
  ExpiresDefault A1209600

  <FilesMatch \.php$>
    # Do not allow PHP scripts to be cached unless they explicitly send cache
    # headers themselves. Otherwise all scripts would have to overwrite the
    # headers set by mod_expires if they want another caching behavior. This may
    # fail if an error occurs early in the bootstrap process, and it may cause
    # problems if a non-Drupal PHP file is installed in a subdirectory.
    ExpiresActive Off
  </FilesMatch>
</IfModule>

# Various rewrite rules.
<IfModule mod_rewrite.c>
  RewriteEngine on

  # If your site can be accessed both with and without the 'www.' prefix, you
  # can use one of the following settings to redirect users to your preferred
  # URL, either WITH or WITHOUT the 'www.' prefix. Choose ONLY one option:
  #
  # To redirect all users to access the site WITH the 'www.' prefix,
  # (http://example.com/... will be redirected to http://www.example.com/...)
  # adapt and uncomment the following:
  # RewriteCond %{HTTP_HOST} ^example\.com$ [NC]
  # RewriteRule ^(.*)$ http://www.example.com/$1 [L,R=301]
  #
  # To redirect all users to access the site WITHOUT the 'www.' prefix,
  # (http://www.example.com/... will be redirected to http://example.com/...)
  # uncomment and adapt the following:
  # RewriteCond %{HTTP_HOST} ^www\.example\.com$ [NC]
  # RewriteRule ^(.*)$ http://example.com/$1 [L,R=301]

  # Modify the RewriteBase if you are using Drupal in a subdirectory or in a
  # VirtualDocumentRoot and the rewrite rules are not working properly.
  # For example if your site is at http://example.com/drupal uncomment and
  # modify the following line:
  # RewriteBase /drupal
  #
  # If your site is running in a VirtualDocumentRoot at http://example.com/,
  # uncomment the following line:
  # RewriteBase /

  # Rewrite URLs of the form 'x' to the form 'index.php?q=x'.
  RewriteCond %{REQUEST_FILENAME} !-f
  RewriteCond %{REQUEST_FILENAME} !-d
  RewriteCond %{REQUEST_URI} !=/favicon.ico
  RewriteRule ^(.*)$ index.php?q=$1 [L,QSA]
</IfModule>

# $Id: .htaccess,v 1.90.2.5 2010/02/02 07:25:22 dries Exp $