Go to your Settings->Reading admin page and adjust the settings for your front page display and to select which page will show your posts. Hope this helps!
Like I explained, I have done this but it doesn’t work.
It seems like the ‘Blog’ template of your theme is created so as to show the blog categories first, instead listing the blog posts. When you click on any category you will get all posts of it. If you are familiar with WP template files and PHP, you can modify the existing ‘Blog’ template or try to get support from your theme support team.
Yes there is def. an issue here. The blog template should show posts, shouldn’t it? Unfortunately I am not advanced enough to understand PHP and go change something in there, as for the theme seller, he is not really answering questions! I need help! Thanks.
Okay. Then at this point I’d suggest hiring a WordPress developer (http://jobs.wordpress.net/) to get this completed. Make sure to let potential developers know the budget and timeframe – but also don’t just hire the cheapest help, take a look at their work and check out their references.