Blog address (URL) not working – error 500

Everything is fine .. BUT ..

WP 2.5 installed at http://example.com/site/wp ..

have a webredirect that sends http://site.example.com to http://example.com/site

WordPress address (URL): http://example.com/site

this all works .. BUT ..

The spiders are confused. I think I need to set the Blog address (URL) to htt://site.example.com

But when I do .. I get the following error ..

Internal Server Error
The server encountered an internal error or misconfiguration and was unable to complete your request.

Please contact the server administrator, webmaster@example.com and inform them of the time the error occurred, and anything you might have done that may have caused the error.

More information about this error may be available in the server error log.

Additionally, a 500 Internal Server Error error was encountered while trying to use an ErrorDocument to handle the request.

— thoughts?

what am I missing?

/s