.htaccess conflicts with protected directory (.htpasswd)

Question

I use a .htaccess file to rewrite my urls to make them SEO friendly, this works fine. This file is located in the root (public_html). A website runs there too.

Now I created a directory named 'templates' which is CHMOD to 777. I want it to be protected so these files cannot be accessed from outside.

Through directadmin I protected that folder.

Now if I use my browser to surf on the website all the urls are still SEO friedly. However when I try to surf to that protected directory (templates) it shows a 404 page that I created but shows 401.shtml as title. If I look at the url it also shows 'domain.com/401.shtml/'.

It does not ask me for an username or password either.

Now if I delete or simply rename the htaccess file (to .htaccess2) which is located in public_html (the one that arranges all the SEO friendly urls) the pages on the website do not work (obviously) but now if I surf to that /templates directory, it does ask me for an username and password and I am able to login and access the files.

This is the htaccess file I use in the root:

RewriteEngine On

ErrorDocument 404 /home
RewriteBase /

RewriteCond %{REQUEST_FILENAME} -f [NC,OR]
RewriteCond %{REQUEST_FILENAME} -d [NC]

RewriteRule ^(.*?)$ $1 [L]

RewriteRule ^(nl|NL|fr|FR|en|EN)/start\.html$ /$1/ [R=301]

RewriteRule ^([^/]*)$ /$1/ [R=301]
RewriteRule ^([^/]*)/$ index.php?page=$1 [L]

RewriteRule ^([^/]*)/([^/]*)$ /$1/$2/ [R=301]
RewriteRule ^([^/]*)/([^/]*)/$ /index.php?page=$1&subpage=$2 [L]

RewriteRule ^([^/]*)/([^/]*)/([^/]*)$ /$1/$2/$3/ [R=301]
RewriteRule ^([^/]*)/([^/]*)/([^/]*)/$ /index.php?page=$1&subpage=$2&subsubpage=$3 [L]

EDIT: I've noticed that when I turn the RewriteEngine Off in the main htaccess file it does work too (except for the rewrite of course). Any idea's?