Display a block based on current select option
Don't try to add the fields in a form alter hook. Do this in the field UI of the user entity /admin/config/people/accounts/fields. To change the visibility of fields dependending on the content of another field use

Conditional Fields

or the Form #states API directly, see How can I hide or show fields using states with hook form alter.

EDIT: The form #states api did the trick.