Zen Cart doesn't require mod_rewrite. But many so-called SEO experts insist that it's important to rewrite URLs to shorter wordier strings. What Vger is telling you is that if you ever wanted to do any mod_rewrite, you'd be unable to do that if you're going to use Zeus as your webserver, since Zeus is incapable of mod_rewrite.
As for all your 500 errors, those are also a result of Zeus's incomplete .htaccess implementation. You're right: renaming the files will allow the PHP scripts to run, but will give you ZERO protection, and you'll have to write your own new security rules to work with your server.
With respect, if I may be so forward, even a registered charity finds ways to come up with the funds required for administrative expenses. Hosting a website is only a few pounds a month, and is money well-spent on finding a solid hosting company offering conventional and secure hosting services.
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