It does not work when installed as "subsite"
Look for this code in the .htaccess file in the root of the Drupal site's filesystem:

# Modify the RewriteBase if you are using Drupal in a subdirectory or in a
# VirtualDocumentRoot and the rewrite rules are not working properly.
# For example if your site is at http://example.com/drupal uncomment and
# modify the following line:
# RewriteBase /drupal


and remove the '#' from the beginning of the RewriteBase line. That should tell Apache/Drupal how to properly rewrite URLs for your case.