I know there about a thousand pagination issue questions on here, and I've looked at them, but I can't seem to figure out what's going wrong with mine. This is a loop on a custom post type archive template, but it should call ALL POSTS since I'm using it as a blog. At the very top of the template, is a query for a specific page, but I don't think that's what's causing the problem.

What happens is that on the second page I get a 404 error.

<?php get_header(); ?>
<?php // query post #4606
$post_id = 4606;
$queried_post = get_post($post_id);
$title = $queried_post->post_title;?>
<?php echo $title;?>
<!-- The Actual Loop, with a count so that I can style the first post differently   -->
<?php $post = $posts[0]; $c=0;
$args = array(
    'post_type'=> 'post',
    'posts_per_page' => 7,
    'paged' => ( get_query_var('paged') ? get_query_var('paged') : 1),
    );
query_posts($args);
while (have_posts()) : the_post();
?>
<!--Featured Post-->
<?php $c++;
if( !$paged && $c == 1) :?>
                <?php if ( has_post_thumbnail()) : ?>
                    <a href="<?php the_permalink(); ?>" title="<?php the_title_attribute(); ?>" >
                        <?php the_post_thumbnail('archive-featured-img', array('class' => 'aligncenter')); ?>
                    </a>
                <?php endif; ?>
                <!--the title and content etc.-->
<!--Other Posts-->
<?php else :?>           
                 <!--the title and content for all other posts-->         
<?php endif;?>
<?php endwhile; ?>
<!-- The end of the loop   -->
<!--Page Navigation-->
<?php if (  $wp_query->max_num_pages > 1 ) : ?>
                <div id="post-nav" class="cf">
<div class="nav-previous"><?php next_posts_link('Next Page &#187;', 0); ?></div>
<div class="nav-next"><?php previous_posts_link('&#171; Previous Page', 0); ?></div>
                </div>
<?php endif; ?>
<?php
wp_reset_query();  // Restore global post data
?>

        <!--SIDEBAR--repeats the page title from above, then dynamic sidebar-->      
                <h1><?php echo $title;?></h1>
                <?php echo $queried_post->post_content;?>
   
            <?php dynamic_sidebar( 'Main Blog Page Sidebar' ); ?>

<?php get_footer() ?>