It might also be a problem with the transformer.
I tried to extend the wire of the original transformer so that I could mount the camera high up. Spliced in about 2.5m of cable, and when I switched on got exactly that behaviour...red light on...redlight off, clicking sound with IR lights on, and then cycling.
I found that if I reduced the splice to about 1m the problem went away. I realise that you probably did not monkey around with the hardware I did, but maybe there's a hardware problem with the xformer?
I assume that the camera isn't actually putting out a picture during all this...if it is, then I guess that it is the light level as JavaLawyer says. You could get around this by manually setting day/night mode timing in the setup.