g1smd - 10:21 am on Dec 9, 2012 (gmt 0)
Remove everything and test again on a clean browser to see the effect of any hidden rules. The only way to see their code is to get your host to send it to you in an email.
Control panels (CP, PLesk, etc) generate the absolute worst htaccess code there is. The unwanted escaping in the target URL is just one of the common offences against decent code.
The RegEx pattern matches the path part of the URL request, and is presented to the parser after it has been "localised" on a "per folder" basis. This means the leading slash, or the leading folders ending with a slash in the case of htaccess in a sub-folder, has already been stripped by the time mod_rewrite gets to look at it.