Somewhere I remember reading that its bad for SEO for your blog url to be blog.mycompanyurl.com. I can't remember where or why. My host only allows above option. Do you think its a big deal?
Not true at all. SEO business, if you haven't figured out that so far, is chock-full of half truths and nonsense. SEO "experts" don't understand the correlation at all and imply causation on pretty much everything they come across. Most of your PR comes from backlinks so whether you use a CNAME or a directory is quite simply irrelevant.
To my knowledge, what matters Google pagerank-wise is a page, not a web site.
However, if you are going to provide individual homepages for the users of your web site and you want their URLs be mycompanyurl.com/username, like with del.icio.us, then maybe the domain option would be a better choice, and probably not only for your blog but for the rest of your corporate info as well.
They have a one click installer that blows up if the url is not in the format: blog.myurl.com. I put in a support request and told them that I want myurl.com/blog and they said its not supported (by the one click installer I guess)
Redirect blog.companyurl.com to companyurl.com/blog. Seems like the most complete solution and, it happens to be what Google does for many of its subdomains.
I'd do a bit of reading on this and see if you can find some consensus. I don't think you'll find a ton of SEO experts here (though I might be wrong). Lots of opinions to be had at http://www.google.com/search?q=seo+subdomains&btnG=Search
For the record, I think the /blog option is the way to go (and I've had SEO somewhere in my job description for about a decade).
I don't think Google or other search engine for that matter will make any distinction if it's blog.companyurl or companyurl/blog. You can choose whichever, it will make no difference in how the Page Rank is computed.
Not sure what is best for SEO and such. Doing the redirect mentioned by ed sounds like a good solution. We currently run blog.company.com but I might set up the redirect as that sounds like a good idea.
