Hi!
I am not quite sure whether blood decay has been re-implemented in the recent versions. It was gone for a while, that I am sure of.
Dwarves will clean up 3x3 tiles worth of dirt centered around an underground tile (meaning a tile that has never been exposed to sunlight). However, not all dwarves are eager to do so (in my fortresses, usually the nobles who are to meet liaisons and diplomats suddenly start a cleaning spree the moment the person they ought to talk to shows up).
Blood on the surface will be destroyed by rain (any tile hit by a rain drop will be cleansed of all blood that is there).
Thus, surface tiles which are now covered by a ceiling can not be cleaned in any way (short of removing the ceiling).
Also note that creatures cleaning themselves at a water will simply drop the dirt on their body on the tile they are standing - so if they clean themselves at an outside water source, you may face similar problems as with any outside contamination.
The main approach to handling the issues is thus placing everything that is likely to attract blood (hospital, butcher's shop, refuse pile for corpses) underground with enough underground tunnel between it and the first surface tiles that it doesn't get out of hand.
I also recommend placing the entrance to the fortress into an underground tunnel so that you can clean up after any sieges more effectively (at least I prefer a tunnel as you have with igloos, together with some nice weapon traps).
Deathworks