Image style doesn't rebuild after image style flushed
Problem solved!!!

After checking that Drupal manages itself 404 errors by checking .htaccess file :

# Make Drupal handle any 404 errors.
ErrorDocument 404 /index.php


I had to put this line into my settings.php... This is in the Drupal 7.20 release notes :

$conf['image_allow_insecure_derivatives'] = TRUE;


This thread saved my day.

Wish helps others.