UPDATE: all was fixed when I used the necessary command-line directives to get .htaccess, etc. working properly in the template-driven SME Server environment. See: this post.
Right now I’ve got a filename-based permalink structure like this:
It is a fallback position as I haven’t been able to get the real pretty links working with .htaccess, etc.
Unfortunately, I still have to leave the SEO Friendly switch turned off on the Link Directory settings too!