Just figured out what was happening:
Wordpress when included tried to get its files relitave to the location of the calling file. Since they were in different directories it could not find them. It then sent me to the install page because it figured I didnt install yet. Here is the fix
Code:
//Wrong
require('./blog/wp-blog-header.php');
//Wrong
require('blog/wp-blog-header.php');
//Right
define('ABSPATH', dirname(__FILE__).'/');
require(ABSPATH . 'blog/wp-blog-header.php');
edit: That actually broke something else, but it is yet another step to an actual solution. I'll post again when I find it.
edit2: The problem it created had to do with the inner workings of my templating system, I included the file in the same way in a non-template file and it all works perfect.
Thanks Jordan!