Blisters can be caused for any number of reasons, most common is the club moves in your hands during the swing and rubs. You will often see folks wear holes in their gloves due to this shifting.
Check this video out compared to what you are trying, IMO it is fundementally correct and a great place to start.
[ame=http://www.youtube.com/watch?v=AmK07gRcVo0]Golf Instruction - The Proper Golf Grip - YouTube[/ame]