The answer to this question becomes fairly simple if you perceive the straight distance between the 2 points (the diagonal distance), as the hypotenuese of a triangle.
Since the length of each block along the E-W axis is 400 (and there are 2 such blocks). The length of one side of the Triangle becomes 400*2 = 800
Since the length of each block along the N-S axis is 200 (and there are 3 such blocks), the length of the other side becomes 200*3 = 600
Hence length of XY = sqr rt (400^2+600^2)
=Sqr rt of 1000,000
=1000