I think I understand the mechanics of "Walk-back Tuning":
Sight in at 20 yards
Shoot one at 20, 30, 40, 50, etc. to your comfortable shooting distance, but always using the 20 yard pin.
See how the arrows align...do they fall straight, to the right or left?
If falling either right or left, you need to adjust your rest accordingly (falling right...move left and vice versa?), in very small increments, say 1/16th or so.

(If I am wrong on the method, please correct me.)

My question is this: How do you do this if your shooting at a small block target, i.e. a McKenzie Layered foam target (maybe 20" square)?

Thanks,
Andrew

Instead of aiming for the center dot on the target, put a spot as close to the top edge of the target as you're comfortable with and then move back to various distances still aiming at that same top edge spot. Aiming at the top edge of the target will give you more room to allow for the drop of the arrow.

Usually if your left/right is out, it'll show up at 30 yards enough for you to correct it. Like jeremy said, put a dot up at the top, zero yourself at say 20 yds, then shoot it at 25, 30 and 35. You shouldn't drop far enough to be off the block, and you should be able to tell if the left/right is ok.