Got To Layout
Then Click On Add a Gadget
Window Will Open Then Select Blogger Archive There by clicking + sign
Now after opening it select the drop down menu option and make changes in other option as you want.
Now save it. You will see an drop down archive added to your blogger sidebar. Its simple !!!!
Thats the archive in above picture that will be installed in your sidebar.Its width will be the problem as will not adjust your sidebar.
After installing it you will feel the problem of the width of archive,how to change width of drop down archive read it here.Change width of drop down archive.