webjunk

It looks like that your shortcode is wrong:
Need to be EXACTLY what is shown at the top of the COntact Form Editor. like:

[contact-form 2 "Form Example"]

I would NEVER recommend doing it. Could be very dangerous in several ways.
But if you must, look in controller.php. You will I believe need to take out (in two places) the section like:

// remove upload files
		foreach ( (array) $wpcf7_contact_form->uploaded_files as $name => $path ) {
			@unlink( $path );
		}

AT YOUR OWN RISK!

/blog is only one single PAGE of posts. Its not moving the site. And it is not moving your entire blog. The “Blog” encompasses many PAGES especially as you normally set a limit of how many blog posts get displayed per page; plus the individual Posts pages; category & tags and they are all essentially linked together within WP. Keep in mind as the article state, its only a placeholder.
Since your question was about SEO, the SE’s will relink the PAGES as they spider your site again. There will be a period of time when you might find overlap between the old HOME and the new /blog.
AS I mentioned before, SE’s use the entire related site and domain
even when ranking the HOME page. Both Inbound/Outbound links (heard of a Links page?) from an entire site weigh heavily on SE rank even though they are on other pages. As does content on all other site pages, consider that almost all WP sites identically limit same number of posts to a Home/Blog page. It is Linked content. So that is why it does not matter if Posts are on the main page.
Having said that, as Seach Results are based on keywords, moving Posts may force links to the specific blog posts Pages than the Home page. As presumaby your Posts will be changing then of course you will not keep those keywords on the same Blog page anyway as they get pushed off. Unless you leave the last thousand Posts on a blog Page which would help SEO but who would wait for that page to load? Still, often it is not really a non-blog Page as Home that is needed but just a Header that communicates what they wanted. There are trade-offs and as every site is different each site owner needs to outline their own goals.
I have many hundreds of sites that have a Warning/Welcome/Landing Page (not just a HOME page) with virtually no content yet those Pages are indexed higher than the inside pages with tons of content. ANd More Importantly higher rank than other sites with more content on their home page plus more incoming links to their Home page than some of these sites I have done.
There is MUCH, MUCH, MUCH more to SEO than just links to a Page and the content on that page. When I use to do seminars one of the biggest questions was always something like “I have tons of incoming links, bunches of content, but am not ranked very high, what is wrong?”
Because there is much, much, much more to it. And while there is a lot of Positive things to do, SE’s can also count some things Negativly. Google gives out that it uses hundreds of millions of variables computing rank. Ask.com claims even higher. Might be showing my age, but SE’s have come a long way since Archie or ALIWEB. They are now very intelligent; do a lot of processing and ever-changing.

@fifthhouse
The article you gave the link to is rather dated. Its more the transition from WP as blogging software to CMS. Just the choice between whether to have Posts show on the front page or a Page. As I asked in one of my earlier posts, I asked what you are calling a “Static Post” and what we NOW are discussing is not a static page, especially to me. A static page to me would be “index.html” If you read the article you linked to notice they put static page in quotes as in:

While we are calling this a “static front page,” you can change the content on that web page at any time by editing the Page.

No where in the article does it say anything about what you asked in your original post:

move the blog to http://www.mysite.com/blog?

Maybe you did not actually read the article yourself?

They need to be logged in to view the page (just make it private)
But you want that page to be the Login page itself?

If they are already logged in to view the page why would they be sent to a Login page?

@girlygurl
Not exactly true. First also realize that Google does not encompass 100% of the SE market. Making everything for google will hurt you substantially. Second the SE’s do rank domains. There are many things in your “inside” pages that effect your Home page and in fact your entire domain.
As for “static homepage” you have to define to me what a static homepage is? If it is truely static, never changing, then it will hurt you badly as all SE’s rank based on updated content. And almost any WP page is dynamic but the way a SE “views” the page, it “sees” it identical as a static HTML page. PHP is executed server-side so never seen by a browser, even a SE spider.

Do not know if it will fix you problem but imposible for me and probably most others support you on 2.7.1 or atleast have the time it would take. You would need to go through every plugin and see if it is compatible with 2.7.1 and many newer ones may not be backwards compatible. Your theme may not be as well. And then your current version of PHP may not be compatible with 2.7.1
Either you upgrade WP, plugins & theme to current or you probably need to go through every command in every file to see if there is an issue. Waste of time in my book. ANd I would not run an older verion anyway or you are missing literally thousands of fixes and updates in WP alone.

Magic quotes “escapes” certain characters in the PHP code