Have you tried that code without the shield and no Ethernet.begin() in the sketch?
yes I did, read A B C cases in my first post for the blink blink results if I comment out ethernet.begin the led is blinking.
And the V1.0 Ethernet.begin() is different than what you are using. The V1.0 requires a dns server ip in there. I have found that if you don't use dns, it really doesn't matter what ip you give it.
I tried adding a dns in the Ethernet.begin function but cant ping the arduino and no blink blink
#include <SPI.h>
#include <Ethernet.h>
byte mac[] = { 0x90, 0xA2, 0xDA, 0x00, 0x59, 0x67 };Â
byte ip[] = { 192, 168, 0, 2 };
byte dns[] = { 195,130,130,4 };
byte gateway[] = { 192, 168, 0, 1 };
byte subnet[] = { 255, 255, 255, 0 };
void setup()
{
 Serial.begin(9600);
 Ethernet.begin(mac, ip,dns, gateway, subnet);
 pinMode(13,OUTPUT);
}
void loop()
{
 digitalWrite(13,HIGH);
 delay(500);
 digitalWrite(13,LOW);
 delay(500);
}