A WordPress blog can either be structured as a page based website or its conventional post based structure can be retained. That’s why understanding the differences between posts and pages, http://en.support.wordpress.com/post-vs-page/
Pages http://en.support.wordpress.com/pages/ are static and are for content that rarely changes. They sit outside of the blog structure and you cannot post to multiple pages in any blog.
There is only one main page for posts http://en.support.wordpress.com/posts/ in a blog and all posts will display on the main blog page. There is no way to exclude posts from the main posts (blog) page. The front page of the blog by default will display your posts (not pages) http://en.support.wordpress.com/post-vs-page/ in reverse chronological order, with the most recently published post on top. If you do not want all the posts to show on the front page, then you can create a static front page “Welcome” for your site and a “Blog” page for posts.
Choice 1 static front page
Choice 2 running page for all posts on front page
Which do you choose? It’s one or the other.
If you choose a static front page then you have to create two pages as I said above. After you do that you go to > Settings > Reading and make the designation change and click “save changes”.
I believe that you will benefit from reading this post as there are many misconceptions about custom menus http://wpbtips.wordpress.com/2011/12/19/custom-menus/
Among the most common misconceptions is that bloggers fail to understand that the static pages they create do not automatically update. Only the dynamic pages like Categories, Tags and Archives created by the software when we publish a post we that we have assigned Categories and Tags too will update automatically update with posts.