The post on my home page is trying to use custom permalinks. I have that option set to default so I end up with a 404. The link in the sidebar is correctly using the default. I changed the theme to the default wordpress theme and it works correctly on the home page. How do I get the post on home page to use the correct link?

This should be fixed in the current version 3.3.2. Either update or alternatively replace the Post Headline part in index.php with this

PHP Code:

        <!-- Post Headline -->                    
        <div class="post-headline">    
        <h2><?php 
        if( !is_single() AND !is_page() ) { ?>
            <a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php 
            if (function_exists('the_title_attribute')) { 
                the_title_attribute();
            } 
            elseif (function_exists('the_title')) { 
                the_title();
            } ?>"><?php 
        } the_title(); 
        if( !is_single() AND !is_page() ) { ?>
            </a><?php 
        } ?>
        </h2>
        </div>

Thanks! I will update.