In short circuit condition, what is wrong with following derivation

[Theresa]

V=ir considering the whole circuit
Now we knowV=E-ir
Then ir=E-ir Therefore i=E/2r
Therefore,V=E/2

 

[mfb]

There is too much context missing. Where do you measure the voltage V? What is E? One of them seems to be used inconsistently.
Why is there a resistor if it's a short circuit?

 

[etotheipi]

Like @mfb said it's hard to help properly without further information, though I presume you're referring to a physical cell with internal resistance being shorted.

In that case, you're mixing up symbols. Your analysis as it stands is actually for a circuit with load resistance equal to the internal resistance.