Nginx config for wordpress in subfolder with rewrites for main folder

[sip]

I have a vbulletin site in root and a wordpress blog in /blog/

the root nginx rewrites all work as they should utilising the dbseo plugin
for vbulletin to make search engine friendly urls

if i turn on permalinks in wordpress i get a 404 error no matter what i
try.

Could anyone advise what the change should be to be able to use a different
set of rewrite rules in just the blog folder.

I am hoping to have other wordpress installs for different purposes so this
will hopefully explain for the future also.

Current domain.conf for nginx

-------------------------------------------
server {
        listen 80;
        #listen [::]:80 default ipv6only=on;

        server_name www.mydomain.com mydomain.com;
        root /home/username/domains/mydomain.com/public_html;
        access_log /home/username/domains/mydomain.com/logs/access.log;
        error_log /home/username/domains/mydomain.com/logs/error.log;

        index index.php index.html index.htm;
        error_page 404 /404.html;

        location / {
            try_files $uri $uri/ /dbseo.php;
        }

        location ~ ^((?!dbseo).)*\.php$
        {
                rewrite ^/(.*)$ /dbseo.php last;
        }

        # Pass PHP scripts to PHP-FPM
        location ~ \.php$ {
            try_files $uri =403;
            fastcgi_split_path_info ^(/blog)(/.*)$;
            fastcgi_pass unix:/var/run/php5-fpm-username.sock;
            include fastcgi_params;
            fastcgi_index index.php;
            fastcgi_param SCRIPT_FILENAME 
$document_root$fastcgi_script_name;
        }

        # Enable browser cache for CSS / JS
        location ~* \.(?:css|js)$ {
            expires 30d;
            add_header Pragma "public";
            add_header Cache-Control "public";
            add_header Vary "Accept-Encoding";
        }

        # Enable browser cache for static files
        location ~*
\.(?:ico|jpg|jpeg|gif|png|bmp|webp|tiff|svg|svgz|pdf|mp3|flac|ogg|mid|midi|wav|mp4|webm|mkv|og$
            expires 60d;
            add_header Pragma "public";
            add_header Cache-Control "public";
        }

        # Deny access to hidden files
        location ~ (^|/)\. {
            deny all;
        }

        # Prevent logging of favicon and robot request errors
        location = /favicon.ico { log_not_found off; access_log off; }
        location = /robots.txt  { log_not_found off; access_log off; }
}
--------------------------------------------

I have tried a load of different options to get this to work.

I have posted these on stackoverflow which is possibly simpler than posting
again here. 
thats here
http://stackoverflow.com/questions/29518899/nginx-config-for-wordpress-in-subfolder-with-rewrites-for-main-folder

Any help w2ould be most appreciated.

I think i just need the basics of how to ignore / include certain rules for
certain pages.

how do i make /blog/ only use its own rules and ignore everything else.?

Posted at Nginx Forum: http://forum.nginx.org/read.php?2,258060,258060#msg-258060