You could keep several of any kind of jawfish in a 120 gal tank, and a tight fitting is very necessary. I'm not sure what to look for when purchasing a blue spotted jawfish, but they are much harder to keep then yellow heads (or prearly jaws is the same fish) there could be several reasons for this, I've posted before on blue spots and how they are collected commercially. All of the ones I've ever seen collected (I've dove and collected with commercial divers several times) are collected by using drugs, one collector even used diluted bleach to get the fish out of it's burrow. With this info, it shouldn't suprise you that they don't live too long. The other fact about themis they are temperate, not tropical and that may play a part in their poor survivability. Though some hobbyiests keep them successfully at 80 deg, it is better for them to be cooler. There are some reasons they are harder to keep then pearly jawfish.
As far as keeping them happy, the deeper the sand bed the better. In the ocean they find a burried flat piece of rock and use that as the roof of the burrow, from there they build a tunnel out of sand and rubble so the deeper the more natural. I have successfuly kept them with as little as 2 inches of fine sand and some rubble, but more is better. Burry some flat peices of rock at least 1 inch off the bottom of the tank and add as much sand as you can above that and you'll be fine no matter what species you try.
Feeding a mixed diet of frozen and dried will keep them happy and healthy so just make sure you have variety and you'll be fine.
