pardal was correct.
You are doing everything right, except for drawing the block correctly. Go to the block drawing and type "base". The locate that point. AutoCAD puts that point on the polyline when you insert the block using "divide". You have to move that point, called the base point, in your block drawing. Do that by typing "base" and specifying a new base point. Then save and close the drawing. Now, in your other drawing with the polyline, you must redefine the block by either deleting all occurrances of it and "purge"ing the drawing or some other method (and there are several). NOw divide again and it should be OK.