I am having the same problem as before. I did an rsync with my prod site to make sure all files were exactly the same. It shouldn't have overwritten my local.xml because I used the exclude option. But once again I am getting the 404 not found error on any page I go to (on the dev site, which is in a subdirectory of the root) I made sure the permissions were 755 on the local.xml, and all the connection specific info is correct. What I did see is that it doesn't seem to be picking up the changes I made in the database to core_config_data to point the base url at the subdirectory. What else would cause it not to be reading the local.xml?
Enable Magento debugging features and check the
I had one of this 404 errors, spend lot of time to find why but thanks to debugging I found the culprit! turns out one of my external library files is calling a class that doesn't exist!