I put the wordpress files in the root directory and want index.php to be the main page. Everything is in the same folder.
When several changes have occurred, we have to debug one change at a time, to find out which one is causing the problem.
Did the blank screen problem exist BEFORE you did this? If the problem started when you made that change, reverse what you did - put it back as it was and see if it now runs correctly. If you made changes to the blog locations in settings, reverse those also back to the way they were. Admin / Settings / General
If the problem existed before you made that change, or reversing it back did not resolve the problem, temporarily set your theme to the default theme and see if that makes a difference. If it works OK with the default theme, then try switching back to the theme you want to use and see if that works. Which of these steps work and which don't mean something as far as debugging what is going wrong, so please try them all and report back on what you found.
If none of these work, the problem may be the RAM. Googling, I found 1and1 does not allow PHP more than 20megs of memory, so if that proves to be the problem, then yes you have a problem hosting with 1and1. However, its not yet determined that memory issue is the problem. It would have been nice to be able to bump it up, to eliminate that or prove it is the problem. But there are other things to test first before deciding memory is the culprit.