Blog title permalink going to wrong URL

I have WP installed in a folder (news) on my website. Most of it seems to be working fine, but when I click on the heading of a blog entry, the browser takes me out of WP back to my main website – the WP (news) folder level appears to be missed in the Permalink link.
I am guessing that I am missing something in the config somewhere, but am having difficulty finding what.
Your assistance would be greatly appreciated; thanks.