I don't think they're flashing. After everything flashes during the initial powerup, I'm not sure they usually do blink. One of the sticky's here say that HW versions 1 and 2 require a cable modification to report a failed drive so I thought maybe the LEDs are just messed up. I don't know.
Unfortunately, the ethernet port is a little messed up. You have to hold the wire a certain way for the connection to be made, so I propped the cable up against something to try and hold it in place. It was working for a while and then I lost network connectivity again (someone probably moved it a little). I have to keep fiddling with it to try and get connected again.
It's been about two days so hopefully it's at 10% by now, at least then I'd know it's doing something!
We just threw out a ton of memory a couple weeks ago, I'll have to see if there's anything left. Do you know if there's a max capacity for the slot?