=IF(ISNA(VLOOKUP(A1,Sheet1!C:E,3,0)),"",VLOOKUP(A1,Sheet1!C:E,3,0))
The IF(ISNA Structure used here will return a "" if A1 is NOT found in Sheet1 Column C.
Therefore the ISNA captures it because the VLOOKUP is an error.
However, If A1 IS found in Sheet1 Column C (say it's in C20),
BUT the corresponding Value in Column E (E20) is Blank
Then the ISNA doesn't capture it, because the VLOOKUP is NOT an error
It's returning the value in E20 (blank).
So just like =A1 will return 0 if A1 is blank,
So will a vlookup.
Hope that explains it.