The startup sequence is located in S: Unless the FBlit documentation specifically tells you to put it in the startup-sequence then I'd put it in user-startup instead. Both files can be edited in any text editor as long as you save it back as plain text.
If it must go in the startup-sequence it will be at a specific point, which the documentation will tell you. It's years since I've used it myself so I don't remember if it must.
For future reference; if you ever get an RTG card you'll need to remove FBlit or some of the graphics data won't get displayed by the video card.
