Are you certain that your hosting company has the database and the version of php that you need? Is your configuration file correct? Does your hosting company have a way for you to manage your database, like with phpmyadmin or are you at their mercy?
That is not true that the posts will show on the front page only. Just take the loop out of the index.php page and put it in another template page that you create. Call it blog or something. Then create a page called blog and use that new template.
I like your idea to use pages and then associate posts. It is what I would try but I am no expert.
