The most likely thing I can think of is that after enabling the login block module you didn’t click “save” on the Modules > Blocks page. You need to do that even if it is displaying the “Show to visitors” option that you want for the login block..
If that is the problem, then I shall look at adding a blank option when it hasn’t been saved.
If that’s not the problem, I’ll need to have temporary access, with full admin rights.
Even if this works, just for “looks” have you thought about embedding the login block inside your existing HTML block rather than as an odd addition to the right? With a little html code to position it and the right text it can look good. (#callBlock:login_block#)