Block displays will show up on your blocks administration page. Once a block display is created and saved, it can be enabled and positioned in your theme by visiting administer >> site building >> blocks and selecting it from the list.
Blocks do not accept arguments from any source; the only way to get arguments to a block is to provide defaults to it, possibly via the PHP Code default setting.
Edit the argument in question; you may want to override this argument if you have multiple displays using it.
Change the "Action to take if argument is not present" to "Provide default argument". This will bring up a new box called "Provide default argument options".
The most common default argument type used for blocks is Node from URL, where it attempts to determine if the URL refers to a node, for example if visiting 'node/1' or 'node/1/edit'. User ID from URL is also very common.
If you change the default argument type to 'PHP Code' (note: You must have permission to use PHP code on your site) you can enter PHP to define the argument needed. Simply return the argument.
If you are using a more link with a block, you must have a page display for that more link to attach to. The more link will not print if there is no place (no display) for it to link to.