Ok, lets try your SSI out for a sec:
Make a new .txt file and put whatever you want in it eg:
"If this shows it works"
save it as ssi.txt
now in your .shtm file insert:
<!--#include file="ssi.txt" --> (copy and paste to get the exact spacing etc).
upload both files into the same directory, and try to open the .shtm file. It SHOULD show the contents of the ssi.txt file.
Also, you may want to try the following code in your .shtml file
<meta name="GENERATOR" content="Microsoft FrontPage 5.0">
<meta name="ProgId" content="FrontPage.Editor.Document">
<meta http-equiv="Content-Type" content="text/html; charset=windows-1252">
<title>New Page 1</title>
It may just be a problem with absolute referencing.
You may also want to try chmod the cgi script to 775 (compared to 755 or 777).