You don't need to have a separate install of WordPress for your blog.
You've done the right thing by creating the home page and setting that as your static home page. I'm assuming you've done that for the blog posts as well?
If you have the 1 install for WordPress there shouldn't be a separate folder WordPress, nor a folder within your WordPress install called "Blog".
Typically what I do is create my Home Page within WordPress, then create a page called Blog (and leave it blank) then go to Settings --> Reading. Choose Static Pages and then set my home page as "Home" and my Posts as "Blog".
I understand how some of this can get pretty confusing, but keep asking questions, we're all here to help you out.
I my offer to connect with you directly is still open. I'll be working on my own projects tomorrow but around if you need some help.