DISCLAIMER: I don't take my Step 1 until July, but...
I think it all depends on where you are in your preparation. If you're still several months out (like me), then I think it behooves you to do your blocks in tutor mode so that you can fully absorb each question stem, answer choice, and explanation. This is where you make the connections between what you learned in class, FA, or wherever and the way the NBME will expect you to apply it.
Conversely, if you're in your dedicated study period and only have a few weeks left to study, I'd recommend doing your blocks timed, random. This way, you'll be simulating actual testing conditions during each block and getting a feel for timing, pace, etc.
Maybe some of the M3's and M4's can chime in, but this is the approach I'm taking. Good luck!