OK, it definitely looks like you need this for Lycos:
$CFG->dirroot = BASEDIR."moodle";
$CFG->dataroot = BASEDIR."data";
Yes, you can set it up next to postnuke, but I would wait a few days for 1.0.8 if I were you.
[a few minutes later]
Ah, I just noticed the other new discussion you started where you say it works now. Great.
Installing and upgrading help
Fatal error: Failed opening required 'http://members.lycos.co.uk/phpworld/moodle/lib/setup.php'
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