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    Upgrading our server after Internal Server Error occured

    We have Economy 4 GB Dedicated Server Plan. Our site was getting error  when we have 1000+ concurrent users. It goes slower as well. We have tried restarting the server, and checking error logs via ftp (no strange errors). We also increased our MySQL max_connections to 2000 (151 is the default) as we think this can also one of the cause of internal error. Doing all those steps don't prevent the error. 


    One thing could also cause the error is the .htaccess we have, and below is the setup:

    Options -Indexes
    <IfModule mod_rewrite.c>
    RewriteEngine On
    RewriteRule ^index\.php$ - [L]
    RewriteCond %{REQUEST_FILENAME} !-f
    RewriteCond %{REQUEST_FILENAME} !-d
    RewriteRule . index.php?%{QUERY_STRING} [L]

    What is possibly wrong with our setup? What is the best move for us to prevent this error? Should we upgrade our Server? Any guide is much appreciated.


    P.S. We have 40,000 users registered on our site.