If you are using blogger to publish your blog to your website hosted on a third-party Web host you will not be able to customize the layout.  Instead you must use their canned layouts/templates.  You can make subtle modifications to these templates but if you are trying to make your blog seamlessly integrate with the design of your website you will not be able to.  When you try to use the “customize layout” option in blogger you will get this message:

“Blogger Layouts customization is not supported for blogs hosted on non-Blog*Spot servers. To use Layouts, you’ll need to host your blog on blogspot.com (Blogger’s free hosting service) or a custom domain (point your own registered domain name to your blog).”

This guy is also having the same situation and found the solution with WordPress:

I wish I would have found this out before going through the effort of setting up the blog and FTP settings.  For those of you out there considering using the blogger FTP function to seamlessly integrate a blog into your third-party Web host website I hope you can find this post before you go through the effort.  You might be looking for this information by searching for the following:
blogger FTP publish, restrictions, custom layouts, custom templates, custom CSS.

If you are bright you might be wondering why I don’t just set up WordPress on my third-party Web host… the answer is that my third-party Web host is a small town web host that does not have their act completely together.