Finally, I discovered that removing the .htaccess file under "assets", fixed the issue completely.
However, I'm guessing that file was placed there for a good reason and I was just curious as to whether or not its a good idea. If its not, then is there a fix?
It seems there's more threads popping up about this subject, this [url]http://www.silverstripe.org/general-questions/show/14861[/url] is one for instance. Turns out my host is using FastCGI, so will try the patch and report back.