I have a scenario where I have two files, one is index.php and the other is index.htm.
How would I setup a rewrite condition / rule so that if index.htm exists on the server in a subdirectory, pass the request to this file. And if the file does not exist pass the request to /index.php?
It depends on your subdirectory structure, but one solution would be to simply use index.php exclusively, and write some PHP at the front of index.php to check for the existence of the other file:
Otherwise, check out the flags for RewriteCond
http://httpd.apache.org/docs/2.0/mod/mod_rewrite.html