Li Shenron said:
"You can strike opponents 10ft away with it, but you can't use it against an adjacent foe."
This is the description for reach weapons in the PHB. After 1.5 year of playing D&D, I realize I'm not really sure what an "adjacent" foe is! 
Does it mean you can strike only foes 10ft away, but not foes 5ft away (neither a foe in your square)? Or does it mean you can strike foes 5ft and 10ft away, but not foes in your square?
A reach weapon can strike foes 10 feet away ... and
ONLY foes 10 feet away. "Adjacent" refers to teh use of miniatures of other markers, on a big grid used to track relative positions (many groups use special "battle mats", which can be marked on (with special markers/pens) and erased repeatedly. Thus, the GM can draw terrain directly onto the map; the Wizard who just cast a Wall of Fire can -draw- a line to represent the wall, with little arrows pointing towards the "hot" side; with a ruler and a peice of string, your Druid can show EXACTLY where her Entangle spell is in effect. And so on.
Each square on such a grid is 5'. Therefor, enemies in sauares or "spaces on the board" that are adjacent to YOUR square, you cannot attack with a normal reach weapon.
Which of the two:
ooooo ooooo
ooooo oxxxo
ooxoo oxxxo
ooooo oxxxo
ooooo ooooo
The rightmost, presuming the o's denote threatened squares. Picture a grid, like graph paper; your PC occupies the centermost x; each character in yoru diagrams is another square in the grid, or "space on the board".
Your own space, and any space NEXT to that space -- including diagonally -- is where your Reach weapon cannot strike. THAT is why hte second diagram, on the right, is the correct one.
Of course, one can always simply make a 5' adjustment away from the enemy, and then make your attack (since s/he/it is now 10' away).
Or, just get a Reach weapon that -can- attack adjacent enemies (Spiked Chain in the PHB; the Duom in S&F). The Duom is actually rather nifty; the first time you get someone 5' away from you with it, you give YOURSELF flanking ... but it takes an exotic WP to learn.