Hello,
I have the same problem as mentioned in the topic: http://wordpress.org/support/topic/falcon-activation-problem-and-a-workaround
That topic is marked as resolved and the change log of version 5.0.2 also mentions a fix for "Issue that caused caching to not work on sites using subdirectories."
I have installed Wordfence 5.0.3 so I have that fix but when I download the backup copy of the .htaccess file it contains the following warning (I stripped the html markup and changed actual dir details):
Warning: readfile(/xxx/xxx/domains/mydomain/public_html/subfolder//.htaccess) 'function.readfile': failed to open stream: No such file or directory in /xxx/xxx/domains/mydomain/public_html/subfolder/wp-content/plugins/wordfence/lib/wordfenceClass.php on line 1316
I could still enable the falcon engine, but when I checked the .htaccess file in the domain root it wasn't changed.
Thanks
JP