I've been in and out of this thread at various times, and I might have missed someone else giving this, but I remembered that "blue blood" or "blueblood" was questioned earlier, so I looked it up in WorldWideWords which is an excellent source of reliable word knowledge, run by Michael Quinion. He says:

Unlike so many other expressions, this one is well documented.

It's a direct translation of the Spanish sangre azul. Many of the oldest and proudest families of Castile used to boast that they were pure bred, having no link with the Moors who had for so long controlled the country, or indeed any other group. As a mark of this, they pointed to their veins, which seemed bluer in colour than those of such foreigners. This was simply because their blue-tinted veins showed up more prominently in their lighter skin, but they took it to be a mark of their pure breeding.

So the phrase blue blood came to refer to the blood which flowed in the veins of the oldest and most aristocratic families. The phrase was taken over into English in the 1830s. By the time Anthony Trollope used it in The Duke's Children in 1880, it had become common:

    It is a point of conscience among the — perhaps not ten thousand, but say one thousand of bluest blood, — that everybody should know who everybody is. Our Duke, though he had not given his mind much to the pursuit, had nevertheless learned his lesson. It is a knowledge which the possession of the blue blood itself produces. There are countries with bluer blood than our own in which to be without such knowledge is a crime.

Dave Oesterreich