The Add your blog to our listings? setting determines whether or not your blog will be linked to from Blogger.com — specifically, the Blogger homepage and Next Blog. If you select "No," your blog won't appear in these places, but it'll still be available on the Internet. This blog will still be displayed on your profile, unless you hide it by deselecting the relevant checkbox on the Set Displayed Blog page.
The Let search engines find your blog? setting determines whether or not your blog will be included in Google Blog Search and if it will send a signal to Weblogs.com, a service which continually displays recently updated blogs, letting them know that you've made a new post. If you select "No," everyone can still view your blog but search engines and other content aggregation services will be instructed not to include it in their listings.
You can access these settings by clicking on the drop-down menu next to the gray Post List icon, going to Settings | Basic, and clicking Edit under the Privacy section.