General Support: Friendly URL Error (http://mydomain.com/index.php?level=album&id=x)

Hello,
I have a problem with making the url user friendly.
I uploaded the gallery to /catalogue, so it is not in the root folder.

This is how my url looks like in a basic mode:
http://mydomain.com/index.php?p=catalogue&level=album&id=1

This is how it SHOULD look like after setting .htaccess in root folder:
http://mydomain.com/page/catalogue/album/1

But instead, I simply get something like this:
http://mydomain.com/index.php?level=album&id=1

As you can see parameter "p" drops out, I think something is missing or should be modified in .htaccess (root or the one in the plogger's folder)

Could you help me with this?
Thanks in advance,