I have a wordpress website called http://mysite.com (example only), I want to have a link http://blog.mysite.com, how would I configure that one using only one wordpress install(same wordpress install on http://mysite.com) and of course the same database that the http://mysite.com uses. Should I just use a plugin or what?
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If you want to use 1 wordpress install for two different sites try using http://wordpress.org/support/forum/multisite .
Otherwise, I would agree with the answer above and you would only need to setup a simple redirect in your hosting control panel.
Add a subdomain of a kind http://blog.mysite.com pointing to a location similar to http://mysite.com. In this way both the domains will point to the same wordpress installation.