mod_rewrite with second blog on subdomain?

While I have the mod_rewrite rules working fine on my main WP install, I find it wrecks havoc with various subdomains and software installed in subdirectories on my main site. In order to fix this, I’ve had to create “.htaccess” files in each of these subdomains/directories with the text: “RewriteEngine Off”. I’ve even thrown one into the /wp-admin folder, and it seems to help with some weird behavior it was exhibiting. However, and this is where I am having trouble, I want to have Nice Archives on my second WP blog, installed on a subdomain. The problem is, if I turn the RewriteEngine On, it starts messing everything up, no matter what I do. Is there some way I can set the top level .htaccess file to ignore specific folders, so that I can turn the Rewrite Engine On in this folder? Or can I write the RewriteEngine rules in such a way that they tell it to ignore instructions from the top level domain?
Thanks for your help!