MSN does not tell you if you are blocked - that's the purpose of being blocked. If you're blocked, your friends will never appear online if they blocked you.
An easy way would be to make an alternative MSN account, and then try adding them/seeing if they're online. If they are, but aren't on your original account, they have blocked you.
I can't tell you why your friend would have blocked you, but the easiest way to find out would be to create a new screen name (they are all free) and add him/her.
