DNS domain name question

Firstly this is quite complex (to me anyway), but I'll try to explain it best I can;

I have a website (WEBSITE-A) which is hosted by siteground. All working nicely for 2 years. My package with siteground includes unlimited storage space, which is great.

I've recently bought a domain name using www.123reg.co.uk, its a .co.uk name. This is a small website I'm setting up, WEBSITE-B.

Since I already have unlimited space with Siteground, I decided to create a subfolder on WEBSITE-A called WEBSITE-B, and uploaded my phpfiles. Now when I go to www.Website-A.co.uk/websiteB my new website appears, great. I then logged into 123reg.co.uk and told it to forward all requests for www.WEBSITE-B.co.uk to www.Website-A.co.uk/websiteB. So now, when I goto WEBSITE-B.co.uk it appears correctly.

However, I've just found out that using this method of forwarded is frowned upon by search engines, and that I can fix it by altering the DNS settings of WEBSITE-B via 123.reg.co.uk

My questions is, what exactly should I change, and will I need to buy a new hosting package or can I continue to keep wesite-b as a sub-folder of website-a?

I hope someone out there can understand this, and explain how I should be setting things up.

Thanks guys

well you can set the path of the domain to where the website is hosted!
and that should be able to correct the mistake since you have it as the main path!

yeah, that is correct. clumsy method, as you should have used the same nameservers you used for domain A as for domain B. (Given by your hosting provider)

I can change the name servers to use the same ones as my Website-A, but the problem is I would have to purchase an add-on-domain from them to host the files.

I believe making that purchase for the add-on domains is the only way else...

- upgrade your hosting package that will allow you to host multiple-domains, do not save on this money especially if you have unlimited hosting.

- still stick to the initial method. Do not be scared off by the search engines. As long as your content is good, it will be picked up though to website A and that's your motive right - getting traffic?