The way my WordPress installation is set up is WP is in a directory called wordpress under my root directory. Both the .htaccess and index.php files are in the WordPress subdirectory. There is an index.html file in the root that redirects to the index.php file in the WordPress subdirectory.
This works ok, but is not the way the Codex instructs on installing WP in it's own directory. The Codex does not use the index.html file to redirect, it has both the index.php and .htaccess files in the root. When I changed things following the codex instructions, my home page would work, but not any of the internal site links to posts and pages. I thought this was because permalinks needed to be updated, but doing that in the options admin panel did not fix the page not found errors.
I put everything back the way it was and all works again, but I really would like to have it set up the way recommended in the codex. Can anyone suggest what might be the problem?