Codeigniter install on subdirectory (htaccess question)

[eluser]Ayeyermaw[/eluser]
I'm not really up to speed on the use of htaccess although I do inderstand it at a base level.
Here's my problem:

I have a top level domain which has a codigniter application. I've removed index.php using htaccess as many people do.

So far so good.

I now want to put separate codeigniter application in a sub folder on that domain. I'm putting a complete codeigniter install in that subdirectory for simplicity and will worry about sharing core files between applications at a later date.
The config file is configured in this second application to use index.php and i have omitted the htaccess file for now. I'll play at removing the index.php later, once this hurdle is out the way.

What I find is that the links on my sub application are showing without the index.php and therefore not working (although the default_controller does load as it should) I assume this is to do with the top level htaccess settings.

I'm probably missing something really simple but have run a search on the forums after attempting to resolve it on my own and come up with nothing.
Any idea how to work around this?