I did manage to set up the blog so the real website root was the blog index page, and the mod rewrite was meant to redirect page views from /blog/ to the website root. I just figured that out, so once I can get the sitemap to work properly, I will be changing my site to the blog appears on the main page.
In the options panel, I have the URL of the blog set to https://www.mysite.ca and the blog installation set to /blog. My sitemap is in the server root page.
With this setup the sitemap creates properly, but each URL shows “/blog/” before the entries.