When a person is cremated, the iron in their blood becomes a magnetic dust that looks

What about a full human of blood combined with a very powerful magnet?

You mean a MRI? Not sure what it does with the iron...

Unfortunately not. That iron ain't coming out.
Magneto is a liar

Magneto's powers were a bit more refined than a mere magnet. He could control the metal much more exactly, allowing him to pull the microscopic pieces of iron out of the blood.
Not saying it would make sense in real life, but it works well enough for a movie.