There are some requirements that your system/server should support:

System side
Joomla! 1.5.x

Server side
1. PHP 5
2. Linux Apache: mod_rewrite or Windows IIS: ISAPI_Rewrite Lite or IIS Mod-Rewrite

Before you go to installation section you should set to YES the SEF and mod_rewrite options in Global Configuration:

The suffix option is not important because you’ll set it from AceSEF Configuration.

The default Joomla!’s  htaccess is enought for AceSEF, so just just rename it from htaccess.txt to  .htaccess