unconjugated bilirubin=pre-hepatic, h2o insoluble, from hemolysis. if there is increased hemolysis (hemolytic anemias), or if the liver is not able to keep up with demands, unconjugated bili goes up. unconjugated bili crosses the blood-brain barrier and is neruotoxic.
conjugated bilirubin=post-hepatic water soluble. if the liver is conjugating all the bilirubin it recieves, but there is some sort of obstruction in the biliary tree (stones, tumor) then conjugated bilirubin backs up in the blood stream, so increase serum conjugated bilirubin. (this is also changed to urobillinogen, which can be seen in the pee at high levels of serum conjugated bili)
there is usually an increase in both with intra-hepatic problems, such as hepatitis and cirrhosis, as the liver is not effeciently conjugating or secreting the bilirubin.
so, diagnostically, the type of bilirubin in excess is important to help localize the problem.