There seems to be confusion here as I can't replicate IF I follow these instructions (attached screenshot).
1. Rename home.php to homeold.php (even just delete it if have a back up copy)
2. Make sure you have NO home.php in the parent OR child theme you are using
3. Link up the news /blog template to the page called blog
4. Set up the front page to whatever name page you have for instance mine is called about
5. Make sure you have NO other plugins on apart from BuddyPress just for testing purposes
As said a screenshot is included to clarify.
*EDIT we are having some issues with uploads I am investigating but the settings are as follows:
A static page (select below)
* Front page:about
* Posts page: blog