Fiona,
Try using single quotes to enclose what’s being echoed and double for the href – like this:
echo '<li><a href="<? the_permalink() ?>">'.$title.'</a></li>';
You would have to set up an archive page so usually it would be something like:
http://www.yoursite.com/archives/
for the link.
Try this – I’m assuming you want to use the latest post on the main page:
<?php query_posts('posts_per_page=1');>
<?php if (have_posts()) : while (have_posts()) : the_post(); ?>
<h3 id="post-<?php the_ID(); ?>"><a href="<?php the_permalink() ?>"
rel="bookmark" title="Permanent Link to <?php the_title(); ?>"><?php
the_title(); ?></a></h3>
<?php the_content(); ?>
<?php endwhile; endif; ?>
Then link to your page with the general archive.