I'd like to add info on this matter, for myself and for anyone having this same problem in the future. I believe that the issue started with a plug in. I suspect it was "ultimate member" but i can't say it for sure.
The thing is I hired a dev to fix the problem and this is what he said...
"there was not rewrite enabled on your server side.
But if you wish to enable it yourself, then head to your server and find the global configuration file, httpd.conf."
I found that file compressed as a .gz... I opened, but of course I can not understand much about its content.
So I have 2 questions
1) Could anyone explain what is the exact line/s that can make wordpress "pretty permalinks" to work?
2) Is this file read by the server even when compressed in .gz?
Thanks a lot!
PS: Not only I want to learn this to avoid future problems... but also cause the dev I hired placed link to a casino in a post! Yes, I know in unbelievable, but he did. I was suspicious about giving credentials to anyone, but I needed to fix this ASAP and I paid him good to do it. It makes no sense, right!