How can I make my site run by WordPress instead of my site-builder?

I have a current site at http://www.sigthepath.com and it is run by Zoho Sites (fee includes hosting). I have recently learned WordPress and love the way it works, but I am having some problems conceptualizing how to transfer my site to WordPress.

I plan on moving EVERYTHING manually, but I want to work on the new WordPress site while the old one is still up and running in the meantime. Once the WordPress version is good to go, I want to just change DNS records and whatnot so that http://www.sigthepath.com points to the one run by WordPress.

I have just purchased a hosting plan with GoDaddy, so I'm wondering if I need a domain name or if I should do some sort of sub-domain thing? As I type this, I believe that all I would have to do is install WordPress on the home directory under http://www.sigthepath.com/wordpress, and once it's all ready to go, I would just move everything into http://www.sigthepath.com and then change the DNS records of the domain name?

Any help with this would be greatly appreciated! I love you guys' plugins and plan to use them on all of my sites.