Want to add a forum, which route should one take to install. ...site/forum or create a subforum. What would be better for rankings and SEO.
Read this article and decide for yourself: http://www.mattcutts.com/blog/subdomains-and-subdirectories/
yes.. its standard directory structure everone use.. SEO optimization depends on various point, not just forum folder. for example u can buy a new keyword rich domain just for forums if u wish.
Using a sub domain or a sub folder will make no difference. The nice thing about keeping the forum on your current domain name would be more backlinks for that site. People will link to forum posts made, thus those backlinks will count towards your current domain name. Does your current site have a good amount of traffic going to it?