As far as I can remember, player blocking works like this:



1) you have to have the CMDR on your friends list (why is a complete mystery to me!)

2) you can then block that player



3) this results in your 'preference' to not be instanced with that player coming high up in the considerations when allocating players to instances.



Which means - blocking is NOT 100% guaranteed to never instance you with that player.



In some cases other considerations will take precedence and will result in the two of you being instanced together. One example could be entering an existing instance with multiple players already in it, and one of those is a player you have blocked. Most likely the number of unblocked players will be the deciding factor and you will enter that instance.



It is a long time ago that I read up on this, so time and old age may have got some of the details wrong - so please don't quote me on this being authoratitive. I'm pretty sure that Sandro did explain it many moons ago, if someone is interested in digging through the forum history.