When creating an index with online = on, the create index process will not block when creating the index object itself, but when it comes to near the end of the process, it will acquire a schema modification Schema Modification lock (SCH-M) for a period of time in order to actually add the index to the table, this lock type will block all outside operations until the lock is released, which could account for your blocking issues.
You can drop the index and recreate it with the WAIT_AT_LOW_PRIORITY option and MAX_DURATION = 0 MINUTES.
ALTER INDEX IX_Index_TableName1
ON dbo.[TableName1]
REBUILD WITH (FILLFACTOR = 90, ONLINE = ON ( WAIT_AT_LOW_PRIORITY
( MAX_DURATION = 0 MINUTES, ABORT_AFTER_WAIT = NONE ) ));
Let me know if that works for you, because we have the option to specify if we want to kill processes that are blocking the index creation.
Hope this helps.