Ok, your question seems to have two parts:
1) how to redirect subdirectory pages to the root directory (of the same domain). That can be done with the Redirection plugin following the steps outlined above - obviously replacing 'v2' in the regex with the name of your subdirectory.
2) and here is the crux: you want to redirect between main domain and subdomain - that is very different from the original question and I would very strongly advise against doing that via the Redirection plugin.
Simple reason is that you are using a hammer when a very small nail would suffice, i.e if you'd use the plugin, WP would need to be loaded before any redirection would occur, which is extremely inefficient.
On that note: that might be the reason why it's not working in 1). Is WP even being loaded for the original request page ?
Ok, to sum up:
Use the right tool, i.e. .htaccess. IMPORTANT: Place the .htaccess file in the subdomain root (news.mydomain.com) and in the root of any sub.subdomains (news.news.mydomain.com).
In this .htaccess file place the following line:
RedirectMatch permanent ^/subdirectory/(.*)$ http://mydomain.com/$1
You should place this anywhere before this snippet (if it exists in your .htaccess file):
Let me know how you get on.