I had this issue as well. Turns out since my .htaccess wasn’t writable it couldn’t update it automatically.
Check your permalink settings at yoursite.com/blog/wp-admin/options-permalink.php
If you see this message at the bottom:
“If your .htaccess file were writable, we could do this automatically, but it isn’t so these are the mod_rewrite rules you should have in your .htaccess file. Click in the field and press CTRL + a to select all.”
Then just add the code they give you there to your .htaccess.
Good luck!
