buildblog on "[Plugin: WordPress SEO by Yoast] Posts Title template not displaying as expected"

WordPress version: 3.4.2

WordPress SEO version: 1.3.4.1

I did this:

I have set up my Posts Title template as %%title%% %%sep%% %%sitename%% and set my title tag as: <title><?php wp_title('|'); ?></title>

I expected the plugin to show my post description as: blog post title | blog site name

Instead it only shows blog post title

Can someone help and tell me what I'm doing wrong.

Thanks.

http://wordpress.org/extend/plugins/wordpress-seo/