BuddyPress.org

Michael-

Since BuddyPress is a plugin for WordPress Mu, all that it requires is for WordPress Mu to be functioning properly. If WPMU does not find a .htaccess file in the directory in which it is installed, it will try to create one automatically.

Now, does WPMU require a .htaccess file? No. Why? Because people have successfully installed and run large WPMU-based sites on LightTPD and Nginx. These webservers do not support .htaccess files.

What WPMU uses the .htaccess file for (in an Apache or IIS environment) is to set rewrite rules for permalinks. In LightTPD and Nginx, this is accomplished through the webserver’s configuration file.

So, the question is this: What web server platform does Yahoo! Hosting use?

If their webservers are running Apache, then find out if mod_rewrite is turned off. A .htaccess file is basically useless without mod_write. This may be why they say that you can’t use a .htaccess file.

Here’s some information that might help: https://codex.wordpress.org/Using_Permalinks#Using_.22Pretty.22_permalinks

If you continue to have issues with this, I would switch to a host that allows you to use the WPMU .htaccess file.