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Wordpress installation question (error 500)

I just tried to install Wordpress on a mamp server for the Wordpress track. Everything works fine until I get to the point where I click on the “localws.dev” link in the webpage in the mamp server. At that point I get an error 500 instead of a Wordpress initialization screen. If I copy my “local.dev” folder into htdocs and reset the website location to default C:\mamp\htdocs then the Wordpress installing proceeds normally. Why is my server behaving this way and why can’t I put my file in any folder I choose?