An $85,000 out-of-court settlement was announced in a $20.5 million suit against ABC-TV, reporter Geraldo Rivera, and the network's local affiliates. Robert Blakemore, a former county Democratic chairman, and his wife brought the suit in Common Pleas Court, charging libel, slander, and invasion of privacy. They contended that statements about them in a 1980 ''20-20'' news show about a former county probate judge, James V. Barbuto, were false. Their attorney claimed victory. Attorneys for ABC weren't available for comment.