Thanks raharjo, but I think I like the idea of leaving the domain structure pretty much as GoDaddy set it up.
samboll: I do like your 2nd option the best. So, thinking ahead I'm going through the process step by step:
The process to move WordPress into its own directory is as follows:
1. Create the new location for the core WP files ...<snip>
2. Go to the General panel.
3. In the box for WordPress address (URL): ...<snip>
--> assuming I can ignore the above 3 steps because the files are already in the subdir /wp
4. In the box for Blog address (URL): change the address to the root directory's URL. Example: http://example.com
5. Click Update Options. (Do not worry about the error message and do not try to see your blog at this point! You will probably get a message about file not found.)
--> this will work even though the WP files are already in the subdir?
6. Move your WordPress core files to the new ...<snip>
--> no need
7. Copy the index.php and .htaccess files from the WordPress directory into the root directory of your site (Blog address).
8. Open your root directory's index.php file in a text editor
9. Change the following and save the file. Change the line that says:
require('./wp-blog-header.php');
to the following, using your directory name for the WordPress core files:
require('./wordpress/wp-blog-header.php');
10. Login to the new location. It might now be http://example.com/wordpress/wp-admin/
11. If you have set up Permalinks, go to the Permalinks panel and update your Permalink structure. WordPress will automatically update your .htaccess file if it has the appropriate file permissions. If WordPress can't write to your .htaccess file, it will display the new rewrite rules to you, which you should manually copy into your .htaccess file (in the same directory as the main index.php file.)
--> I just checked and I have not yet changed Permlinks from the default, but I have installed and activated the All In One SEO Plugin.
I've never understood "file permissions", but what might need to be done sounds pretty straight forward.
Does it sound like I have a handle on the situation?