V. Dallas Merrell, the politically unknown Montgomery County businessman who entered the Republican primary for U.S. Senate, withdrew and then entered the race again, pulled out for the final time yesterday.

Merrell's entrances and exits won more attention than his six-month campaign against the GOP's most prominent candidate, Prince George's County Executive Lawrence J. Hogan. J. Michael Curtis, former linebacker with the Redskins and Colts, who entered the GOP Senate race at the 11th hour last week, also withdrew in Annapolis yesterday, the last day for candidates to withdraw from the Sept. 14 primary.

Although two other candidates remain in the GOP field, perennial candidate William Albaugh and political unknown Donovan B. Finch, Republican leaders used the withdrawals as an occasion to hail Hogan as the nominee against Democratic Sen. Paul S. Sarbanes. "It became quite evident in the past few days that the person best able to beat Paul Sarbanes in November was Larry Hogan," said Maryland Republican Party chief Allan Levey. "We will all unite behind him."

Merrell's campaign is more than $67,000 in debt. He said he was withdrawing because he had received encouragement but not "the hard dollars" to continue the race. He said he will support Hogan.

Hogan, whose campaign fund- raising is lagging far behind Sarbanes', said that with the field of candidates final, Republicans around the country and corporate political action committees will start funneling funds to his campaign. "We're very bullish," he said.

In races for the state legislature, Mary Conroy, widow of the late Bowie Sen. Edward T. Conroy, dropped out as expected from the Democratic primary for a House of Delegates seat. Conroy withdrew from the race after several discussions with party leaders of a possible county or state job.

Also in the Bowie district, Democrat Timothy S. Williams dropped out of the race for state Senate, giving Leo Green a free ride through the September Democratic primary. Green will face Burton Oliver, a Republican, in the November general election.

Williams said yesterday he decided to withdraw after Green indicated that incumbent Del. Joan Pitkin, a friend of Williams, might be dropped from Green's ticket, which includes the other incumbents, if Williams stayed in the race.

In Baltimore County, incumbent Del. William Rush pulled out of his reelection race. The decision by Rush, who said he had thought about getting out of politics since the 1978 election, appears to give a boost to the candidacy of former Baltimore County executive Dale Anderson, who was convicted in 1974 of political corruption charges and is now seeking a seat in the House of Delegates.