Does it make a difference for search engines what your blog set up is at Blogger? No, it does not. I used to believe that only custom FTP blogging provided quality search engine results, but no longer.
I have just completed over four months of research and analysis on this topic and several others and have found that in some cases a Blogspot based blog will outperform a custom FTP blog. I have also found that if you have multiple services on your website, you may be better served if you are blogging mainly for search engines to have a Blogspot based blog on each individual topic. Great idea, but only if you have the time to blog or pay someone to blog on all of them.
It appears from our research that the topics you have much authoritative content will be able to piggyback on your domain if you are custom FTP blogging, but not by much. So if you want the new Blogger, love widgets, want a quick and easy set up, then regular Blogspot set up is perfect for you.
We are now only recommending custom FTP set up when you want a seamless template with your website, want your blog pages included in your local website search engine results or are blogging on a very narrow topic of services where you have much authoritative content back on your website.
You’ll be able to read the documentation soon, when we post our white paper title “The Tangible Benefits of Blogging.”