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Instant Sites are hosted on different webservers to the standard FTP webspaces - so the same domain name cannot currently be used for both.
It is something we would consider doing, letting customers add and Instant Gallery or Instant Blog (for example) to the standard website they have uploaded via FTP. We will consider creating such options in the future.
But for now, we're concentrating on the Instant Site Builder being able to create complete, standalone websites without any existing technical knowledge.