You're looking in the right place. The file ncbi.tar.gz contains the blast source code as mentioned in the README file.

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                           Version 6.0
      the date of release may be obtained from the file ncbi/VERSION
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This release includes source code for the new (2.0) version of BLAST.
Also included are a small number of incremental changes in the ASN.1
specification. 

BLAST 2.0 - BLAST 2.0 can produce gapped alignments and is capable of 
position-specific-iterated BLASTp (PSI-BLAST).  Compared to the 1.4 release of
BLAST, there are also signficant performance enhancements as well as extensive 
changes to the text report and the format of the databases.  BLAST 2.0
uses threads for multi-processing, using the NCBI threads library.
Three BLAST programs may be compiled in the demo directory.   They are: