Because he liked what he saw from him, Blind hasn't been moved to other positions because of his performances in midfield but because of our lack of quality in other positions. Maybe LVG doesn't rates him in midfield or maybe he does but his changes of position were primarily motivated by a lack of depth and the fact that he beat the competition in those roles.
"Our lack of quality in other positions" doesn't make sense, sorry. LVG in his second season went on and bought Schneiderlin and Bastian in the midfield to cover the gab and ends any chance of switching Blind there because he knew exactly he can't succeed here. Otherwise or instead of getting 2 CMFs in one summer he would have brought a CB and switch Blind to the midfield, so this "lack of quality stuff" doesn't make sense.
Yes he didn't rate him in the midfield and he was right in that and again we may argue Jose doesn't know Blind much but LVG was sure watches Eredivisie regularly to select his national team squad and knew everything about Blind so his opinion on him should be respected.
The fact is Blind has nothing in the midfield except some good passes. He lacks everything else. Hi slowness isn't just in his legs but he's also very slow in his passes and needs to stop and think before just making simple pass. In a position like DMF he'll get pressured heavily due to this and will result in disasters. He needs time on the ball and this can't be a character of a DMF. He lacks any creativity to be deployed much farther.
He doesn't have a preferred position but CB seems the most position most of his weaknesses got covered.