Please be sure to take note of the following:

Select to use a server's rewrite engine to catch URLs that meet specific conditions and rewrite them as directed. Available for IIS 7 and Apache.
Apache users only! - go to your public_html through ftp OR CPANEL and Rename htaccess.txt to .htaccess before activating.
IIS 7 users only! - Rename web.config.txt to web.config and install IIS URL Rewrite Module before activating.

This setting only takes effect if your set Search Engine Friendly URLs to Yes.

To enable Use URL rewriting in Joomla 3.0

1) Log into your Joomla dashboard

2) In the left menu, click on the Global Configuration link under the SYSTEM heading

3) There are several tabs at the top of the page. If you are not on the Site tab, click Site.

4) On the right side of the page, find the Use URL rewriting option (see the screenshot at the top of the article). Adjust the setting to Yes / No, and then click Save in the top left menu.

You can see in the table below how Use URL rewriting affected one of our URLs: