There is something fundamentally wrong with your approach and I guess I finally found it. Had to experiment with different ways how to screw things up and finally found how you managed to get this done
In Settings → Reading → “Posts page” don’t add anything there, leave default instead of your blog page. Leave this option for theme.
Now leave the rest as it is and it should work. Otherwise you can modify your blog page by setting layout options and choosing templates.
Really, no working, I like me send the admin and password for your revision, it is possible? I no change anything, previous update working fine, you remember…