How to move wordpress blog from site root to a subdirectory?

I want to move a wordpress blog from the site root to a subdirectory called “blog”.

<a href="http://codex.wordpress.org/Moving_WordPress#Moving_WordPress_Within_Your_Site">These instructions</a> make sense right up until steps 10 and 11.

What exactly do I have to change under Administration > Settings > Permalinks?

What exact code do I have to put in the .htaccess file? Is the below code correct?

RewriteEngine On
RewriteBase /
RewriteRule ^(.*)$ http://www.diamondlime.com/blog/$1 [R=301,L]

If I know the answers to those questions, step 10 will make sense.

But step 11 is still a problem because the link they give to somebody’s tutorial goes to a page that is really complicated and I can’t figure out if it’s actually applicable to what I’m trying to do.

The important thing here is that I don’t want to break other people’s incoming links to my blog entries.