You have a problem. From the first screenshot up there it looks like you're looking to set a layout on a menu item type "Articles - Category Blog"
The problem is, that's already a layout. You can't stuff two values in the layout parameter. The only thing you can really choose in that particular case is whether to use the template override for the category blog layout (template/html/com_content/article/blog.php) or the original, or one in one of the other templates (essentially selecting whether the layout will be "blog" or "templatename:blog").
If what you're looking to do is create a new layout that's kinda/sorta the blog, you have to create it as a menu item in its own right. But you'll still run into an issue. The com_content component's category view code is hard-coded to do certain things when the layout is 'blog' that will not get done for any other layout. (Yes it was a Bad Idea to do that. It was jaw-droppingly, mind-bendingly bad, in fact. But apparently no one was about to let a silly thing like excessively tight coupling stop them from implementing it.)
So again, if your goal is to create a layout using the data for the category blog layout, you either have to do a template override of that core layout or consign yourself to essentially writing -- and maintaining -- a portion of the view in your template code.