Possibilites:
1. You're typing the key in wrong. Make sure you're not mistaking B for 8, 2 for Z, etc
2. The game is unable to write to the key.dat file. This can be caused by running the game from a read-only folder like a cd-rom.
If you are on Mac OSX, you need to drag the blockland directory to your applications and run it from there. Don't run the game directly from the dmg.