This was discussed a while ago in a different thread, and one suggestion was to use Lan Lights
which was originally developed for XP. In looking at the release notes, it has recently been updated to account for Windows 7 colors and to address large memory systems.
I have it running on my Windows 7 systems (32 bit) - I missed the blinking tray icon also.
A nice side benefit is that it shows a lot of other information as well, like totals, network activity, etc.