Thank you for reporting this. Something did happen in 3.5.1 and I'm trying to figure it out. So far one other customer has reported the same kind of problem. I'm wondering if it has something to do with the way your home directory is configured. Can you think of anything special about your home directory, i.e. is it on a network drive, or on a special type of disk?
As a short term fix you can download MarsEdit 3.5. I would be curious to hear if the problem does indeed go away with 3.5:
I have now confirmed this issue and, unfortunately, it still exists in 3.5.2. I'm going to get it fixed ASAP for a 3.5.3 update.
The issue is that when you open the blog settings, all the values go to default settings, so when you click OK, the old blog settings will be updated with possibly undesired new default settings.
Any settings selected before pressing OK *are* saved for the blog. So if you go through and carefully set all the settings as desired, then click OK, then the settings should be as you want. Just be careful after that not to open up the settings panel again until I get a fixed version of MarsEdit out.