Hi,
there' should be a potentiometer where you can adjust gain for the MLA30, but you will have to open the housing. Marco is right, if the blue led is flickering even without a transponder nearby, it is picking up all kinds of noises -> gain is set too high.
It's also hard to tell if the transponder puts out a proper signal, if you don't have a scope. Do you have an original Mylaps transponder, an old RC3 transponder would be perfect, because the decoder can read it right away.
Andi