Can you be block-listed if you withdraw your application to enter?

The ESTA form explicitly includes "withdrawn your application for admission", as part of the refused admission question.

So it's basically the same, and you will have to apply for a proper visa.

What's an ESTA form? I've never encountered one as a Canadian.

Canadian citizens are exempt but this is the program that allows non-visa travel to nationals of certain countries https://esta.cbp.dhs.gov/

I don’t know what the policy is, but you can be denied entry for any reason