Ok. You have problems with permission rights on your server. I tried to activate permalinks and wordpress ask me to complete manually the .htaccess file because it cannot be done automatically.
Try the solution from here to ensure that the admin is also the owner of files: http://wordpress.org/support/topic/chan ... dmin-panel.
Also try the solution of "whooami" for here:http://wordpress.org/support/topic/upgrade-to-22-dashboard-not-working?replies=47#post-560112 (anyway you need to copy rewrite rules from wordpres in htaccess, add those lines too).
Yep, I just tried to update your wordpress and I receive the form to enter my ftp credentials. Try first to update wordpress, enter the right credentials, and probably all things will go fine.
