Query Page Query Posts. Next and Previous Post links not working properly.

Hi,
I have some custom pages that first call for page content, then the custom pages call for posts from a specific category.

Problems:

1. The ‘Previous Posts’ and ‘Next Posts’ links are showing up after every post.
2. When clicking on ‘Previous Posts’ or ‘Next Posts’ I get the same first 7 posts. There are 10 there. I am not truly ‘seeing’ the second page. However, the link does change from ‘Previous’ to ‘Next’

Here is the PHP being used for this:

<?php $page_62 = new WP_Query('page_id=62'); $page_62->the_post(); ?>
<h1><span><?php the_title(); ?></span></h1>
<?php the_content( ); ?>

<?php if(have_posts()) : ?>
  <?php query_posts('cat=12&order=ASC'); ?>
  <?php while(have_posts()): the_post(); ?>
     <h3><span><?php the_title(); ?></span></h3>
     <?php the_content( ); ?>

  <div class="navigation">
    <div class="alignleft"><?php next_posts_link('Previous Posts') ?></div>
    <div class="alignright"><?php previous_posts_link('Next Posts') ?>
  </div>
</div>		

<?php endwhile; ?>
  <?php else : ?>
    <p>There are currently no Small Dogs available for adoption.</p>
    <?php include (TEMPLATEPATH . "/notfound.php"); ?>
<?php endif; ?>

Any help on this would be greatly appreciated.