The reason why you can't block when dual-wielding is because you'll use the left weapon/spell when pushing the left trigger, and the right weapon/spell when pushing the right trigger. You can only block if there's nothing else that is triggered by pressing either attack button (or just the left one, if ambidexterity isn't yet featured in the game).
I dunno about Xbox (BOO! Down with Microsoft!), but PS3 has two triggers for each hand. Observe: http://us.playstation.com/csimg/PS3/kbid_444/ps3_controller_reset.jpg
So is the bottom one for attack and the top one for block, or what?