Just to clarify, I know pretty much nothing about .htaccess code. My question is, when I have this code in my .htaccess file,

Order deny,allow
ExpiresActive on
ExpiresDefault A15768000
RewriteEngine  on
RewriteCond %{HTTP_USER_AGENT} Wget [OR] 
RewriteCond %{HTTP_USER_AGENT} CherryPickerSE [OR] 
RewriteCond %{HTTP_USER_AGENT} CherryPickerElite [OR] 
RewriteCond %{HTTP_USER_AGENT} EmailCollector [OR] 
RewriteCond %{HTTP_USER_AGENT} EmailSiphon [OR] 
RewriteCond %{HTTP_USER_AGENT} EmailWolf [OR] 
RewriteCond %{HTTP_USER_AGENT} ExtractorPro 
RewriteRule ^.*$ deny.html [L]
DirectoryIndex index.html index.htm index.php

everything works peachy keen. When I add this:

<IfModule mod_gzip.c>
mod_gzip_on Yes
mod_gzip_static_suffix .gz
AddEncoding gzip .gz
# Save temporary work files [Yes, No]
mod_gzip_keep_workfiles No
mod_gzip_maximum_file_size 500000
mod_gzip_maximum_inmem_size 60000
mod_gzip_handle_methods GET POST
###############
### filters ###
###############
mod_gzip_item_exclude reqheader "User-agent: Mozilla/4.0[678]"
# HTML, CGI scripts, PHP
mod_gzip_item_include file \.html$
mod_gzip_item_include file \.php$
mod_gzip_item_include file \.pl$
mod_gzip_item_include mime ^text/html$
mod_gzip_item_include mime ^text/plain$
mod_gzip_item_include mime ^httpd/unix-directory$

I get a 500 Internal Server Error. Where exactly did this code go wrong?

Look at your error log first

I would think you need to close your IfModule, but I'm not completely sure