Hmmm, I tried changing my Blog page title to WPblog and then the page slug to wpblog, but still to no avail...
Oh well...
Thanks for all of your help anyways, MichaelH!
It has been very much greatly appreciated!
I think I have a solution for this, it's not the most ideal way, but it *should* (hopefully) work:
If I set my Reading settings -> Front Page to show latest posts instead of static pages, that will show my blog on the homepage AND within the /blog directory. Pagination works perfectly - with the /blog added to all of my blog posts (I have currently set it that way on my website, www.kimstewart.ca/blog/ if you want to check it out)
So my solution for the homepage is to just hardcode the homepage in there with a static PHP file, overriting any WordPress pages. This means losing WP backend control over my homepage, but it should still work, right?
Also, is there a special naming convention for overriting the WP theme homepage? "/wp-content/themes/themename/frontpage.php" or something like that?
Thanks!