You have to comment out that line
because you have mod_rewrite enabled. For more info about what each rewrite directive does,
read the Apache manual. It says:
The RewriteBase directive explicitly sets the base URL for per-directory rewrites. As you will see below, RewriteRule can be used in per-directory config files (.htaccess). In such a case, it will act locally, stripping the local directory prefix before processing, and applying rewrite rules only to the remainder. When processing is complete, the prefix is automatically added back to the path. The default setting is; RewriteBase physical-directory-path
Your live host has the site stored on its root. Your server has the site stored on a subdirectory. Using RewriteBase / will cause all URLs to be rewritten relative to the root. Commenting it out should pick up the correct subdirectory, as in most Windows pre-packaged server environments the URLs are directly linked to physical paths, unlike the case the Apache manual discusses.
Moreover, if you have trouble, you can always edit your configuration.php file and change the $live_site parameter:
var $live_site = 'http://localhost/mysite';
This isn't really necessary, but some Joomla! experts insist that it's a good idea to set it nonetheless. IMHO, it's not a good idea unless your site doesn't work otherwise, i.e. you have a buggy host.
If you want to match your live environment as closely as possible, you may want to read two articles I've written on the subject. They involve a bit of work, but I know they work because I use that trick on my local Win7 testing server :)
First part:
The Holy Grail of local web development servers - Setting up Apache
Second part (simplified Apache setup):
The Holy Grail of local web servers revisited
Nicholas K. Dionysopoulos
Lead Developer and Director
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