I'm using Magento 1.9 and have installed wordpress in root/blog folder. Here is how my htaccess file looks like. I see an error 500 on blog. Magento site works well though.
# BEGIN WordPress
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /blog/
RewriteRule ^index\.php$ - [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /blog/index.php [L]
</IfModule>
# END WordPress
I don't know if this is the right way
But setting up permissions did the job.
7 5 5
user group world
r+w+x r+x r+x
4+2+1 4+0+1 4+0+1 = 755