Permalinks not working on second wordpress installed in a subdirect

I have a main wordpress installed on the root and now due to a long story about incompatible plugins I need to install a second full instance of wordpress in a subdirectory.

The main site works fine, as does the site in the subdirectory. As long as I don't activate pretty permalinks on the subsite

Once the subsite has permalinks on only the home page is accessible, any other page is captured by the main install that spits out a 404.

I have the following on my main .htaccess (in the root folder of the site)

IfModule mod_rewrite.c
RewriteEngine On
RewriteBase /
RewriteCond %{HTTP_HOST} ^domain.com
RewriteRule (.*) http://www.domain.com/$1 [R=301,L]
SecFilterEngine Off
SecFilterScanPOST Off
/IfModule


# BEGIN WordPress
IfModule mod_rewrite.c
RewriteEngine On
RewriteBase /
RewriteRule ^index\.php$ - [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /index.php [L]
/IfModule
# END WordPress

Directory /path/to/subdir
RewriteEngine On
RewriteBase /subdir/
RewriteRule ^index\.php$ – [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /subdir/index.php [L]
/Directory

And this is the content of the .htaccess that resides in the subfolder

# BEGIN WordPress
IfModule mod_rewrite.c
RewriteEngine On
RewriteBase /subdir/
RewriteRule ^index\.php$ – [L]
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule . /subdir/index.php [L]
/IfModule
# END WordPress

I thought that either the .htaccess in the subdirectory or the Directory directive in the main .htaccess would work. I'm clueless at this point.