The former Luton captain cost United £700k and it had been expected that the fiery midfielder would play a prominent role this campaign.
However, having picked up an injury in training this week, Nicholls could now be sidelined for sometime.
"Nicholls has got a serious knee injury which he picked up in training and it just seems like deja vu after what happened to Stoney (Steve Stone) last year," said Blackwell.
"We hope to God it's not as serious as that but it's something that will certainly keep him out for a while.
"To try and improve what I've got costs significant money and it's always difficult to prise away players who are perceived to be a major asset at other clubs.
''It's difficult to prise them out and it's difficult to raise the sort of money we're looking for."