They way I heard it, is that Blakely didn't think Spud was ready for Div I, and had him go JUCO, intending to bring him in as a Junior. But then Valvano noticed him, and he decided to go to NC State (not surprisingly).
Looking at Spud's wiki page http://en.wikipedia.org/wiki/Spud_Webb (yeah, I know, but I'm just looking for the factual info), he was at Midland College for 81-82, and NC State for 83-85. Then according to the NT Basketball page http://en.wikipedia....39;s_basketball, Blakeley was gone at the end of 82-83, and Newman started in the fall of 83.
So it could be true that Newman turned him away. But if it's true that Blakeley sent him to Midland, then that was also a mistake. I do remember hearing about Spud possibly coming to NT well before 1983.