2.5 in subdir: right htaccess location?

Hi,

So I have WP in subdirectory [wp] and index.php in the root.

Which is the right place for .htaccess? Root or [wp]?

If in root do I need own .htaccess in the [wp]?

in case the file htaccess is in root is the redirect then /wp/ ?
and similarly if the file is in [wp] is it still /wp/ or just /?

Reason for asking is that I have strange 404 and 403 problems when editing and saving post/pages.