[modrewrite] /? not working?

Here is my code

RewriteEngine On
RewriteCond %{REQUEST_FILENAME} -f
RewriteRule ^(.*) $1 [L]
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule ^(\w+)/?$ $1.php [R]
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule ^smarty/(\w+)/?$ smarty/index.php?section=$1 [L]
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule ^smarty/demo/(\w+)/?$ smarty/demo.php?name=$1 [L]
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule ^smarty/demo/(\w+)/(\w+)/?$ smarty/demo.php?name=$1&source=$2 [L]

Code (markup):

When I do http://localhost/error, rule 2 picks up and redirects. When I do http://localhost/error/, I get a 403 error. I don't understand.

Help appreciated,

 

Try it on a REAL domain, instead of localhost.