a "blocked" phone means that it has been barred from use in the UK, usually as the result of a theft. Removing the block, which requires the serial number to be re-written, is illegal in the UK.
a "locked" phone means it is locked to a particular network. This can be quite easy to work around, especially if the phone is a nokia, and is totally legal to do (try www.unlockme.co.uk or www.trycktill.com).
To check if your phone is "blocked", you could try phoning "Immobilise" on 08701 123123 and giving them the phones serial or IMEI number (this can be found on a sticker in the battery compartment or by pressing *#06#).
Hope this info helps.