The Block list and Buddy list are independent of each other in the sense that someone can be in the Block List but not in the Buddy List.
It would not matter if you were in their Buddy List or not - it is just about Blocking. They can remove you from the Buddy List and keep you in the Block List
Or similar effects if you are Not in the Allow Specific People list or the Buddy List if Allow Buddy list is used.
Allow All allows anyone to contact you no matter if you are in their Buddy List or not.
Allow Buddy List Only set at their End would not show them as On-Line if you are not in their Buddy List.
Blocking certain people (you) from their end also makes them appear Off line to you.
Invisible in iChat 4 set at their End (Or in another app that can do it) would make them appear Off-lime.
I have note experimented with Allow Specific People to find out if it can Allow Non Buddy List people (Like a reverse Block List).
Of course they could have been using iChat 3 and logged in with a Screen Name you don't know.
They could have been in hospital for 6 months and not on line at all.
They could be on Dial-Up and not paid the phone bill.
There are lots of possibilities and being Blocked is only one of the way a Buddy List can be run.
7:45 PM Sunday; February 15, 2009