Hello,
well if your .htaccess is named .htaccess.txt then SEF obviously cannot work. I'm not familiar with WAMP and its default configuration, but if you were getting 500 error then in means, there is some problem in the Apache (.htaccess) configuration.
You should make sure in first case, the mod_rewrite is active in the Apache server and that its configuration allows RewriteRule directives in .htaccess file. (check AllowOverride directives for your Joomla instalaltion)
As the next step, check the content of .htaccess. (especiall y the RewriteBase must match your real installation directory relativelly to Apache's (or virtual server) root folder.
I'm afraid I cannot give you any more hints witout more detailed information, however there is not difference between running Joomla and JoomSEF on server or local testing workstation if they are configured in the same way.
Best regards,
Michal Unzeitig