WordPress hosted in a subdirectory (of a rails app) has the wp-admin url without the subdirectory

The blog is available at http://www.example.com/blog. The login url is accessible at http://www.example.com/blog/wp-login.php. But once logged in, the browser briefly shows http://www.example.com/blog/wp-admin/ in the url field and then redirects and finally shows the dashboard at the url http://www.example.com/wp-admin/.

The Problem

Now all the url in the wordpress dashboard (eg: posts, pages, settings etc) are of the form http://www.example.com/wp-admin/xxx.php instead of the desired http://www.example.com/blog/wp-admin/xxx.php. When I click any of these links, the request goes to the rails app which throws an error as it obviously doesn’t know this wp-admin path.

I have set the following in the wordpress’ wp-config.php file:

define('WP_HOME','http://www.example.com/blog');
define('WP_SITEURL','http://www.example.com/blog');

The apache conf file of the rails app has this reverse proxy setting:

ProxyPass /blog http://www.example.com:8080
ProxyPassReverse /blog http://www.example.com:8080

(yes, the wordpress is made to listen in another port)

This is the .htaccess file I have in the wordpress root directory:

Options +FollowSymlinks
RewriteEngine on
<IfModule mod_rewrite.c>
RewriteEngine On
RewriteBase /
RewriteRule ^index.php$ - [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
</IfModule>

The Confusion

I have very little knowledge of how htaccess works. But what’s crazy is, this is based on another app(rails+wp) that’s working with these exact same setup.

The only difference between the working and not-working apps(above) is that, the working site has no www in its root url as well as in its blog url. Could that be playing any hand here?

Any help is much appreciated as I’m struggling with it for weeks.

I’d be glad to furnish more details if you need them.

PS: There’s no .htaccess file in the public folder of the rails app. The above mentioned htaccess file is present at the wordpress folder’s root location.