I had the same problem with sh404sef and my rockettheme Affinity template - ie. template was broken when I activated sh404sef. Found the problem was a couple of things.
1. htacess.txt had to be changed to .htacess in the site's root directory
2. .htacess code is edited - adding script from sh404sef help documentation (3rd party SEF info)
3. MOD rewrite is set to 'on' in Joomla! admin config.
4. Rewrite is set to 'on - ' in the sh404sef advanced tag.
Make the above changes and everything works - for me atleast!