i suspect that when a ship loses all of its hull boxed it has not in fact been sunk at all...but rather reduced to a state of combat ineffectiveness
and thus should most certainly block movement...
they should ALSO block fire though as the vessel is still occupying space and will provide an obstacle to fire

one thing i would like to see though...as it is part of the original game...is that the PLAYER be able to designate his target rather than have the system do it for him...several times i have seen instances where a ship has been reduced to a virtual wreck and one more broadside would finish her off...but the other player moves another vessel in to the same range band and within the same arc of fire and the firing ship arbitrarily decides to switch targets

to me...this would be a VERY important enhancement to the game and would probably change a lot of results and possibly some tactics...it would restore some of the control that a ship's captain would have when it comes to applying his vessel's firepower