Did you already have the line below in your .htaccess file?
Code:
AddType application/x-httpd-php .php
I'm wondering if you just added the ".html" to the end of that line or if you added the whole line including the ".php" before the ".html" on your own.
If you added the whole line, you might want to try it with just the ".html" in there, instead of having ".php .html" on that line. I think that worked for me on something once.
One other thing, I've seen comments about how if your host is running suPHP you may need to edit that line to remove the "/application/" text from it.
Aside from that, I'm not sure why it wouldn't be working for you.