Things really should have changed when you removed the .htaccess stuff.
I'd suggest downloading a fresh copy of CI and making a new setup, don't use any url rewriting and change only the essential configuration.
Once the basic setup is working, add a new function to the welcome controller (as below) and see if it works.
echo 'Hello World';
If things still aren't working then take a look at this post on the CI forums and consider posting your problem to the official CI forum as your issue isn't related to this Wrox book and a wider audience may bring you better answers. http://codeigniter.com/forums/viewthread/138047/P0/