If the laptop is from 06, and you've spent over 150$ on it. You've over spent.
For 500 bucks I can get you a new gen (not ivy bridge) core i5 with a decent graphics card.
Hell, for 800 bucks I would sell you that Alienware MX14 R1 I have. It would be an end all be all for any game you want to play (as this laptop will play any pc game you want to play).
Spending 250 on a laptop will yeild minimal gains. You will be in the same boat you are now, a laptop that is about to die or crash and burn.
Flashing lights can mean anything from memory not seated properly to hard drive cannot find NTLDR or MBR, even Boot INI file could be corrupted.
I could troubleshoot it if you want.
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