Problem with subdomain and path

While building my Drupal 6.x site, I installed Drupal into a sub folder and the custom paths worked as expected.

After setting up a subdomain pointing to that folder, paths like http://subdomain.example.com/bla.htm still work, but paths like http://subdomain.example.com/blub/bla.htm won't work anymore.

When using Firefox, I get the error message "The page isn't redirecting properly".
What am I doing wrong?