I would put the blog in it’s own directory, then pull the RSS feed to display the latest headlines / comments onto the index home page.
I would imagine that with some creative renaming it could be done another way, but from the description of the effect you want, I’d go with the above.
So how would I do this, how do I pull the RSS feed in?
There are a few ways that have been used:
CG-Feedread
http://www.chait.net/index.php?p=85
Do a search for Magpie RSS
Or a plugin:
http://rawlinson.us/blog/index.php?p=212
The bottom of those I toyed with briefly and it was very easy to set up / use, but a search here on the forums for CG-Feedread will also turn up good opinions.
and this will allow me to leave my index.php page as the main page and then when I click on a link to the article it will bring up the article page. This is my link:
http://www.nicktoye.co.uk
I want to be able to have my site behave like http://www.simplebits.com – I know he uses MovableType but when you click on a link it opens up the article in another page.