Single.php failing

Hello,

I am currently developing a new theme but my permalinks from my blog will not link to single.php

I have a single.php created and a 404.php created. Whenever I click the title of a post it redirects me to my 404 page instead of my single.php.

Here is loop code on the index.php

<div id="container"> <!-- THIS IS WHERE THE LOOP STARTS -->
			<?php if(have_posts()) : ?><?php while(have_posts()) : the_post(); ?>

				<div class="post" id="post-<?php the_ID() ?>">
					<h2><a href=”<?php the_permalink(); ?>”><?php the_title(); ?></a></h2>

					<?php the_post_thumbnail(); ?>

					<div class="content">
						<?php the_content(); ?>

						<p class="postmetadata">
	<?php _e('Filed under:'); ?> <?php the_category(', ') ?> <?php _e('by'); ?> <?php  the_author(); ?><br />
	<?php comments_popup_link('No Comments »', '1 Comment »', '% Comments »'); ?> <?php edit_post_link('Edit', ' | ', ''); ?>
						</p>

					</div> <!-- content -->

				</div> <!-- post -->

			<?php endwhile; ?>

				<div class="navigation">
					<?php posts_nav_link('','back','next'); ?>
				</div>

			<?php else: ?>
				<div class="post">
					<h2><?php _e('Not Found'); ?></h2>
				</div>

			<?php endif; ?>
		</div> <!-- containter******* THIS IS WHERE THE LOOP ENDS-->