Does the flashing happen about 16 seconds after you power it on? If so, it means that it is in fail safe programming mode. Normally, in this mode you would then turn on your transmitter with the settings set the way you want (such as bow planes up). Then after a short time the receiver's red LED will remain on. So, what I am taking from your symptoms is, the transmitter's signal is not being received.
As posted before check the crystals.
Have you modified anything or change crystals on transmitter? Or on the receiver? Did you make sure the crystals are firmly seated?
If you can cut, drill, saw, hit things and swear a lot, you're well on the way to building a working model sub.