The setting here > Settings > Reading is only for the RSS Feed summary and does not affect the posts.
If you want to display only excerpts on the front page of the blog followed by read more links, you can insert "the more tag" into each post prior to publication.
Alternatively you can switch to using a theme that automatically displays front page excerpts. This is a list of active themes on WordPress.com that use the excerpt instead of full post content. Here are the themes that do provide that feature > http://en.forums.wordpress.com/topic/theme-with-automatic-excerpts?replies=13#post-1396410