We had this happen on a multistory setup with splitters on each floor and an amp about halfway down the stack. The device that locks down the voltages and signals going to the LNB was bad. When one channel on that was disconnected, the light stopped blinking.

The blinking light does indeed mean that something is bad. It's a matter of troubleshooting from there to pin it down, the problem usually being that you don't have an entire second set of parts with you when you run into the problem.