Enabled "Discourage Search Engines" — Now logo disappears & menu won't work

This is a nightmare, I have nearly completed a site but instead of password protecting the folder I decided to enable the “Discourage search engines” setting. Now the logo has disappeared and the dropdown menu won’t work.

Does anyone know how I can undo the damage caused by this? I do not want to have to redo this site (many many blog posts)…