blog.mydomain.com instead of www.mydomain.com/wordpress

Hi Everyone,
I am having a huge problem. I have installed wordpress in the “wordpress” folder of my server. I have pointed my domain name to that folder in a subdomain so when i go to blog.mydomain.com it actually works. I should say that I have also change the wordpress address and blog address in the general setting to blog.mydomain.com.

When I go to blog.mydomain.com it works and my blog shows up and is fully functional.

The problem is when I try to login to blog.mydomain.com/wp-admin,
the system keeps trying to redirect me to blog.mydomain.com/wordpress/wp-admin………..
I found that if I go to blog.mydomain.com/wp-admin/index.php, I can atleast login for now until I find a way to fix this however a lot of the plugins now try to go to the “wordpress” directory and causeing it to crash.

Any one knows how to fix this problem???

Thank you in advance for any help you can give me.

Thanks,
Hiva