404 is working instead of custom blog template

I am developing an WordPress template right now. I have a static index page. For my blog posts, I am using a custom template named Blog. But when I create a page under this Blog template and try to view the page; it doesn’t show the blog page rather it shows 404.php

I am using these files:

index.php //static index page
blog.php //blog page under Blog template
404.php

This is my site http://ratcat.bugs3.com/samata/
And this is the blog page which isn’t not working http://ratcat.bugs3.com/samata/blog-6

For more help, here is my blog.php main code segment:

            <div class="single_post">
                <?php
                // The Query
                $page = (get_query_var('paged')) ? get_query_var('paged') : 1;
                query_posts("paged=$page");
                // The Loop
                if(have_posts()) :
                while ( have_posts() ) : the_post();
                ?>
                <table>
                    <tr>
                        <td class="left_date">

                                <h1><?php the_time('d') ?></h1>
                                <p><?php the_time('M') ?></p>
                                <span class="year"><p><?php the_time('Y') ?></p></span>

                        </td>
                        <td>
                            <a href="<?php the_permalink(); ?>" ><h2><?php the_title(); ?></h2></a>
                            <div class="author_tag">
                                <span class="author">By: <?php the_author_posts_link(); ?></span>
                                <span class="tag"><?php the_tags(); ?></span>
                            </div>
                            <div class="post">
                                <a href="<?php the_permalink(); ?>"><?php the_post_thumbnail('post-image', array('class' => 'post-thumb')); ?></a>
                                <p><?php the_excerpt(); ?></p>
                                <div class="read_comment">
                                    <a href="<?php the_permalink(); ?>" title="Full post"><span class="read">Read more</span></a>
                                    <span class="comment"><?php comments_popup_link('No Comment', '1 Comment', '% Comments'); ?></span>
                                </div>
                            </div>
                        </td>
                    </tr>
                </table>
                <div class="clear"></div>
                <div class="gap"></div>
                <?php
                    endwhile; ?>
                    <table class="nav_post">
                        <tr>
                            <td><div class="nav-previous"><?php next_posts_link( __( '<span class="meta-nav">&laquo;</span> Previous posts') ); ?></div></td>
                            <td><div class="nav-next"><?php previous_posts_link( __( 'Next posts <span class="meta-nav">&raquo;</span>') ); ?></div></td>
                        </tr>
                    </table>
                    <?php
                    endif;
                    // Reset Query
                    wp_reset_query();
                ?>
            </div>