With the new update, once a blade or hammer head is created, it can only be that item type. You can hammer it to change its appearance, but you cannot turn a blade into a hammer head anymore.

The new method for crafting is:

1. Place the correct number of ingots on the anvil for the item you want to make
2. Press the "Z" key on your keyboard, this will pop up a radial menu.
3. Click on the type of item you want to create (blunt or blade)
4. Press "Z" again to dismiss the radial menu
5. Hammer the ingots.

Follow these steps and you'll always make the correct weapon.

There's a post above this that details what you need to do, also how on earth did you manage to go all the way and click on a 2yr dead post?

But yea. need to use the radial menu