Help/advice Wordpress - newbie 'ere

WordPress.org is the distribution point for the core WordPress script as well as support and so forth. If you're really wanting to have a blog, this is what you use. Any good Linux based web host will have this as a one-click install.

WordPress.com is a free blog hosting service. You can't do as much there as you can on your own WordPress blog (example, Javascript in a post or installing plugins) and any commercialization/monetization/advertising is prohibited. It's great for getting a feel for using WordPress or doing a non-commercial personal blog.

I have seen every variation under the sun when it comes to where you put a blog on a site.

From my point of view blogs don't need to be separate from the rest of a site because visitors don't care what its called or where its located just as long as the content is relevant and of high quality.

I like using WP for the whole website and using readily available plug-ins and themes to customize it.

flexibility2 looks very good. Check it out.

Good Luck.

.....If so, do you use the base website, the domain.com? What do you use it for?
Do you use the blog for articles and the site for selling products or what?...

Like Julian said there are many ways to do this.
You mentioned one; using yoursite.com for a lead product with a yoursite.com/healthnews as the blog (the blog can be named a longtail keyword in your niche instead of blog). Subdirectories can be other products you sell.

Many people have used name.com/blogname as a way to have their name.com site indexed faster. They use it for announcements, tips, social networking, membership sites, interaction with their potential customers and much more. The main site pages can be a lead product sale's page or give away product to build a list, etc. Don't have too many options on the home page or customers will be confused. A salesperson told me one time that giving a customer too many choices usually means they don't decide, they leave.

Other people simply install the blog at name.com and use plugins to make the site work more like the old fashioned html sites.

Part of the choice will depend on your targeted customer group and how much interaction they are use to and desire. My targeted demographic group is still getting use to blogs so I use the main page strategy with the blog in a subdirectory for indexing and tidbits of useful information.
I've even seen some themes created by Warriors that have a salepage look.

In a longwinded way I'm saying, look at your targeted market and ask yourself what are they use too and what do they want. I get the feeling from what you've said and your picture you might be dealing with a younger age group than I so they are very used to social networking, etc.
The key is offering great content, short or long posts and articles, that answers the wants of your audience. The short posts on your blog could always lead to longer articles on your 'site'.
One more tip: don't try too many traffic generation strategies at once. Focus on one that suits your customer base and expand as you learn what works for you and them.

Good luck