I was reading the Blockland Wikipedia from 2005, one of the first posts about Blockland in Wikipedia and it says
"As of February 15, 2005, however, BlockLand was discontinued due to a cease and desist order from Lego, Inc."
I also read on the recent wikipedia "At one point, Lego offered to buy Blockland from Hartman and give him a job working on the game for at least a year.[8] After not hearing back from Lego for some time, Eric went ahead with working on a more complete, retail version of Blockland, having removed all of the copyrighted Lego content."
My theory is that after Badspot declined their offer, Lego shut Blockland down and probably with a reason saying how the studs and characters resembled too much of their products. Who else agrees? Well my main question is if Blockland really did get shutdown by Lego in 2005.