Want to have my wordpress blog in a subfolder instead of root; getting 403 error(obviously). How can I fix this?

Solution:

The WordPress Codex should have any answer you are looking for:

http://codex.wordpress.org/Moving_WordPress

Be sure the check the “WordPress address (URL)” in the General Settings in your wordpress admin. And also update your Permalinks, by going to the Permalinks tab and simply hit Save Changes