Oh, sorry, I didn't fully check that out - you should set the "Local" button too, like Jay Evans recommended here. The "Local" button is on the bar to the right of the viewport canvas.
press p to set pivot when what you want to rotate around is centered or click the set pivot button the right hand side, it is located under the local transformation button.. ***edit actually you dont even have to cent the object.. just press it when everything but what you want to rotate around is centered..