I was having the same or a similar problem: logging into an external OpenID-enabled site with my root URL (where my blog is published) led to a 404 error on my own site.
I'm using WP 3.0.
I tried editing the URL to remove the "wp" (it was wp in my case, not wordpress) and that took me to the
This is an OpenID Server.
Nothing to see here… move along.
error, but didn't log me into the external site.
Tried downgrading to 3.2.2 as suggested, and it then took me straight to the "Nothing to see here" error, without having to edit the URL, but that of course doesn't solve the problem.