Well firstly the flashing LED's on the Modem indicate Traffic have you run any Spy Ware scanners recently?
If not and you don't already have some loaded try these
http://tinyurl.com/du0h
http://tinyurl.com/yrwy2
Download & install both and then after they are installed update them and then reboot into [b]Safe Mode[/b] and run the scans as well as an Virus scanner and remove any infections that are picked up. You should also rerun the scan if any infections are picked up just to make sure that there is nothing else there or that you have actually removed the offending files.
Depending on your usage you should do this at least once a week as with a constant Internet connection infections are quite common and you don't want your computer to be acting as a Bot controlled by someone else.
If the LED's flashing are not related directly to the port you are connected to then it's quite likely that someone else is using your Wireless connection and this could also be another issue that you need to address as if they download some illegal material you are responsible for that download and the Onus is upon you to prove who did it. Also depending on where you live you could still face [b]Criminal Charges as an Accomplice[/b] for allowing this download to occur.
As far as a copy of Media Centre goes MS doesn't have a Trial Copy available to download but if you have XP Pro it has all the elements of MC in it and you can do everything with XP Pro that you can do with MC and more. The USB Box for the Remote will run quite happily on a Pro installation so you don't really need a copy of MC as it is far less useful that the real thing.