problems with the_permalink

I’m terribly new with WordPress. I’m trying to modify the classic theme that comes with the installation. It got the index page up and running but whenever I click on the link (the_permalink) the page doesn’t change instead it displays the full index page. However, the link shown already has the post id.

Below is my sample code.

<div id = "latest">
<?php query_posts("category_name=latest"); ?>
<?php if (have_posts()) : while (have_posts()) : the_post(); ?>
<div id="storytitle">
<div class="day">
<strong class="month">
<?php the_time('M') ?><br />
</strong>
<?php the_time('j') ?>
</div>
<div class="maintitle">
<div <?php post_class() ?> id="post-<?php the_ID(); ?>">
<a href="<?php the_permalink() ?>" rel="bookmark"><?php the_title(); ?></a>
</div>
</div>
<br /><br />
</div>
<div class="storycontent">
<div class="thumb"><img src="<?php echo get_post_meta($post->ID, "Thumbnail", true);?>" height="110" width="110"/></div>
<?php the_excerpt(); ?>
</div>
<hr>
<?php comments_template(); // Get wp-comments.php template ?>
<?php endwhile; else: ?>
<p><?php _e('Sorry, no posts matched your criteria.'); ?></p>
<?php endif; ?>
</div>