I have a question about the MSN Friend Lists that appear in each user's profile.

Does someone get added to that list automatically the moment they accept your invitation to chat, or is that addition something separate?

In other words, can you chat with someone and see whether they're online and NOT be in their friend lists or they in yours?

Also, if I was in some one's Friend List, but I later find I'm not, does this mean I was blocked/deleted, or does it mean they simply took me off the friend list but the chat process is still normal (seeing when they're online, etc.)

The friend list and being blocked are not related.
There is no real way to see if you are blocked or not.

If someone accepts your invitation they should be added to your friend list. But it depends on your (advanced) privacy settings and the (advanced) privacy settings of the contacts on your friend list, if your friend list as a whole or a specific contact is visible to others or not.