Well I did miss something before. It should be AddHandler and not SetHandler. SetHandler I think is what is causing the normal .html files to fail.
I also think that the first directive should technically be this.
AddHandler cgi-script .cgi
Options +ExecCGI +Includes
With all that said though this should not be needed at all. What you are trying to do should work out of the box I think. On the cPanel accounts I Apache handlers for both cgi-script and server-parsed are set up so the AddHandler should not be needed and accourding to the knowledge base http://kb.westhost.com/questions/142...CGI+scripts%3F it should be set up to use the cgi-bin