Upgrading or installing WordPress 2.7 on certain servers will give you 404 errors if you choose to use permalinks such as day and name. This depends on the PHP settings configured.
If you are having this problem, the solution is the following. Create a php.ini file in the root folder where you installed WordPress and paste in these two lines:
magic_quotes_runtime = Off
magic_quotes_sybase = Off
Save it, try to load your blog once again and everything should be working nicely.
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