It is actually neither...
Changing that settings actually alters your privacy settings. That this would solve the problem is only a (strange?) side effect, and it might make things even worse (not the blocking, but other/spam problems!!!).
When you allow "
All Others" in the Allow list, or if you disable the option "
only people in my contact list can see my status", you'll actually disable invitation requests. This also means you enable everybody (incl. complete strangers!) to automatically add you (without any notification/confirmation), see your status, contact you, etc...
Aka: setting that privacy option it no solution at all. You will only
hide the problem.
I suggest you post your issues in the
Windows Live Solution Center (in a new thread; only if there isn't an existing thread; always search forums first).
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