This should work in reverse - BlogEngine goes to the subfolder. Here are the steps we took:
1. Add Blog engine application under your MonoX web site.
2. Choose which compression module you would like to use, one from MonoX web.config or from Blog engine. We used MonoX one and commented Blog engine compression module:
<!--<add name="CompressionModule" type="BlogEngine.Core.Web.HttpModules.CompressionModule, BlogEngine.Core"/>-->
3. Add the necessary DLLs to blog engine bin folder(MonoSoftware.UrlRewritter, Telerik.web..). There might be few more DLLs that should be included. You'll get error message telling which DLL should be also added.
4. Try it in your web browser.
Note: We used a separate application pool 4.0 for BlogEngine.