Mike I just noticed an interesting thing, if I remove the input pin that is plugged into digital 2 and move it to say dig 1 or 0 or analog 1-5 then the same led continues to flash.
While the pin is unplugged nothing happens at all which is what you would expect but we have not set any of the other pins as anything?
By the way the signal is a regulated 5.oV DC input which I understand is well within specs.