How to take pictures with blurry backgrounds on nikon d90?

I use nikon D90 with the kit lens (18-105)
and when I use manual mode and set the F stop to 3.5 (the lowest it can go) it doesn't make a difference to the focus of the background, as to when the F stop is a higher number.

what settings do i need to use so the background is more out of focus, or do i simply need to buy a 50mm lens?

Youll have to come in closer to your subject kinda tricky with that lens because of it wide angle. But you can.

Blurry b/g = shallow depth of field.

To get shallow dof you need wide aperture (f2.8 or wider), telephoto lens (100mm or more focal length) or a close subject to camera distance.

The reason that you are not getting any significant difference in dof at f3.5 is because that aperture is not wide enough for it to notice AND you are only getting f3.5 at the 18mm (wide angle) end. Wide angle lenses have inherently a deep dof.

Your best bet is to get an affordable fast prime lens like the 50mm f1.8 (the 50mm f1.4 would be better, but is more expensive).