Thanks for the feedback.
The WordPress Codex says this about page template for the posts page:
Posts page – Select in the drop-down box the name of the Page that will now contain your Posts. If you do not select a Page here, your Posts will only be accessible via other navigation features such as category, calendar, or archive links. Even if the selected Page is Password protected, visitors will NOT be prompted for a password when viewing the Posts Page. Also, any Template assigned the Page will be ignored and the theme’s index.php (or home.php if it exists) will control the display of the posts.
http://codex.wordpress.org/Settings_Reading_SubPanel#Reading_Settings
I.e. it is not possible to set a page template for a static posts page.
Right now, if you want a sidebar to be displayed on the posts page, you can use the following settings:
Exposure: Archives
Content: Show with all Posts