You never seem to populate the $paged variable with a value. Try adding this before the query (from the codex):
if ( get_query_var( 'paged' ) ) { $paged = get_query_var( 'paged' ); }
elseif ( get_query_var( 'page' ) ) { $paged = get_query_var( 'page' ); }
else { $paged = 1; }
Also, your “load more” link has the page number hardcoded, so it will load the same page (2) every time. Try something like this (untested)
<a class="infinite-more-link" href="http://localhost/greatwebsite/news/page/<?php echo $paged + 1; ?>">More</a>