No, it's present in both encodes. However, the blockyness disappears when viewing it with a media player that uses overlays in it's video acceleration. Catch-22 is that you can't take screenshots when using overlays. VLC has a built-in screenshot function that saves the screen as a .png in it's original resolution and aspect ratio, but it still has to switch off it's overlay for that split-second.
In other words, regardless of what media player was used, that's what you'll see when looking at a screenshot. However, also regardless of media player, when using overlay (which is usually on by default), you'll see smooth edges when pausing the video at that point. You'll see what I mean if you pause the video, observe the picture, go into settings and turn off overlay, then look at it again.
