Hey James - This is your code currently:
<p class="latestpost">Latest Post:</p>
<p> </p>
<p class="excerpttitle"><a href="http://www.thebreadcrumbtrail.org/archives/533" rel="bookmark" title="Permanent Link to Topsy Turvy">Topsy Turvy</a></p>
Paragraph tags are, by default, block elements. That means they won't display inline. In order to do so, you'd need to modify your CSS, such as:
.latestpost{display:inline;}
.excerpttitle{display:inline;}
Or, the other option is to just modify your PHP. Instead of outputting two paragraph tags, just output something like:
<p class="latestpost">Latest Post:<span class="excerpttitle"><a href="http://www.thebreadcrumbtrail.org/archives/533" rel="bookmark" title="Permanent Link to Topsy Turvy">Topsy Turvy</a></span></p>
Hope that helps.
BTW: From an SEO (and semantic) perspective, your post titles would be better suited inside of a heading tag (h2, h3, etc.). ;)