It looks like GoDaddy might have tweaked their .htaccess / mod_rewrite support. As I wrote in an earlier post, the way GoDaddy was supporting .htaccess was causing some confusion, in that even if you uploaded a correct .htaccess file, it could take some time to register. This might have changed.
I haven't done much research or testing, but now when I make changes, they seem to activate immediately. I don't know if this is just me, or whether they've fixed the problem, but it makes setup a lot easier.
Anyway, I've updated the original article to an extent, but have kept the possibly-obselete content in place for reference.
I would be interested to hear what others have to say on this subject. I seem to get quite a lot of referrals from Google from searches for things like "mod_rewrite godaddy htaccess", so it's still an issue.