If you want a separate block for the exposed filter, this should be set to Yes. If you want the filter to be in the View's Block display, make sure that the Block display's "Exposed form in block" option is set to No.
Depening on the configuration you're attempting to achieve, you might want to override your default settings.
Depening on the configuration you're attempting to achieve, you might want to override your default settings.
Views: Using explosed filter to make a search form.
source: http://drupal.org/node/545592