Haven't used this editor or even hacked MM1, so don't take this for more than it's worth.

Looks to me like a map property error.  Either the game has the wrong CHR loaded to draw the blocks, or it's drawing a different kind of object instead of the blocks.  Either way, my first guess would be that the blocks only work for certain map types, and you're trying to put them on a map that's incompatible with them.

Does the editor have like some kind of level header examining thing?  If so, try checking the properties of that map with the properties of a map which has blocks in the original game to see what's different, and mess with those settings to see what needs to be set in order to get the blocks to work.