After creation of Subdomain, Permalinks don’t work.

Hi,
I’m using version 2.6.3 (a bit old i know..)
My blog address used to be domain.com/sub.
I have just created a subdomain : sub.domain.com and pointed it to the existing folder location.

seems fine and all. I can see my blog homepage on sub.domain.com,
I can also access my wordpress control panel at sub.domain.com/wp-admin
but my individual blog post, category page and tag pages are not accessible.

The links to the pages are correct,
i.e – The links on my blog are updated correctly to sub.domain.com/category/postname
but I see a “Not Found” error page.

When I change the Permalink setting back to default,
i.e – sub.domain.com/?p=123
it work fine.

I would like to use custom Permalinks and it was working before I created the subdomain. Is there anywhere I need to update the new subdomain url?
So far I have updated my new blog url (sub.domain.com) on
Wordpress > Settings > General > WordPress address (URL)
and
Wordpress > Settings > General > Blog address (URL)

Do I need to go to the extent of editing htaccess files?

Thanks in advance. : )