I am trying to rewrite the URL through the htaccess file so that the following URL
www.domain.com/subfolder/index.php?key
can be accessed b
When you use relative url's, the browser will dynamically create a complete url by using the url of the resource it loaded. In other words: It uses the url as it is displayed in the address bar. In your case (www.domain.com/subfolder/index.php/key) it tries to load any relative url relative to www.domain.com/subfolder/index.php/. Your resources are however not located there.
You have two options to resolve this problem:
Convert your relative url's into absolute url's, at least absolute to the domain root. Something like should be turned into 
.
Add a base to your head element. This base will be used instead of the url of the resource to calculate the complete url. You should add to your element. / will then be used as the base of any relative url.