how do i use blender with unity
As stated on the Unity website on this page, Unity can import meshes, textures, animations, and bones from Blender.
To import a Blender file to Unity,
- Right-click in the Projects pane, choose "Import new Asset", and navigate to your file
or
- Move the .blend file into your project's Asset folder
For more on importing assets from Blender to Unity, read this page.
Unity can natively handle blender 2.49b files, without the need for exporting to another format, FBX for example. Just place your blend in your ASSETS folder for your Unity project, and see the magic ;-). Hopefully Unity will natively support Blender 2.5 soon, as there is now a feature freeze and final bugfix state for 2.54.