I strongly recommend not putting your blog’s root directory in the same directory as you have installed Movable Type. You’ve just run into one of the main reasons why I say this.
Another good reason to keep your blog separate is that you may want to create additional blog instances. It makes sense to keep them all outside the MT directory. Well, at least it makes sense if you’re a directory neatness freak like me.
Seriously, though, you can quickly and easily back up the static files for your blog separately from your MT install if you keep them in separate directories. Your blog files likely will change a lot faster than your MT install, so you will want to backup your blog more often. If you publish your blog to a sub-directory named “blog”, you can back it up with:
tar -cz blog > blog-today’s_date.tar.gz
So, rather than tweaking your .htaccess file (unfortunately, I am unable to help you there), I recommend either publishing your blog to the root directory of your website or to a different sub-directory. A popular choice is to publish your primary weblog to a sub-directory named “blog”. I know this isn’t the answer to the question you asked, but I hope it is an answer that will save you further trouble down the line.
While I’m on the subject of multiple blogs, I definitely recommend creating a test blog. It takes just a couple seconds to add a new blog in MT. Then, when you want to try out a major change to your templates or to your style sheets, or if you want to install a new MT plug-in that you don’t completely understand, you can experiment first with your test blog. If you screw it up, just blow it away and create a new test blog. Trust me, this is far easier than undoing an intrusive change to your real blog.
Using a test blog also allows you to try out a series of major changes without having people see your half completed, and possibly non-functional, work as you test each change. Once you are confident of the full series of changes on your test blog, you can probably apply them a lot faster on your real blog.