Hi Dan,
the Blog module is a WAP project. You should install the source package as you would with any install package on the latest DNN3 install, and open the solution file with VS2003. When you are done, recompile the module project only and you can start testing.
WSP projects (with code behind and no DLLs) are quite different projects, and I don't know if it worths the effort to convert it to this type.
Best regards,
Dario Rossa