hi,
I saw your thread, after I created a similar one, and I called tech support. They say that the flashing light, even when no wireless clients are connected, is OK.
Also, say the dropped TX Packets when no wireless devices are connected, are normal too.
Everything seems to work fine for me, but the manual does say the light should be solid until wireless activity starts.
I even tried turning off the SSID broadcast, with the same results as you.
Not sure if this helps, but I thought I'd share my experiences.
Thanks!